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Heading into 2025, federal clean vehicle tax credits provide up to $7,500 toward the purchase of a new electric vehicle (EV) or fuel cell electric vehicle (FCV), or up to $4,000 for the purchase of a qualifying used EV or FCV. Credits can be taken at tax time or applied toward your purchase price, effectively lowering the cost of your EV upfront.
Vehicle restrictions and income requirements apply, and choosing the right dealer can be critical. Still, with EV prices high ($56,351 on average in September 2024, according to Cox Automotive) and interest in EVs strong (more than 8% of new vehicles sold in the second quarter of 2024 were EVs, according to Experian data), tax credits are a valid topic of interest for would-be clean vehicle owners.
Here's what you need to know about clean vehicle tax credits for 2025.
How Does the EV Tax Credit Work?
The new clean vehicle tax credit provides a nonrefundable tax credit of up to $7,500 when you purchase a qualifying EV or FCV. A tax credit reduces your tax liability dollar for dollar when you file your federal tax return. EV buyers also have the option of transferring their credits to the car dealership, effectively lowering the cost of the vehicle
Both the new EV tax credit and the $4,000 used clean vehicle tax credit come with restrictions and income limitations. In some cases, you may also find it challenging to find a dealer who's able to file the right paperwork and provide an immediate credit. Still, EV tax credits can help make the purchase of a clean energy vehicle more affordable—and potentially more appealing—for qualified buyers.
What Cars Are Eligible for the Electric Vehicle Tax Credit?
The new clean vehicle tax credit applies to new electric, plug-in hybrid and fuel cell electric vehicles. To be eligible for the credit, vehicles must undergo final assembly in North America and meet sourcing requirements for battery components and critical minerals used in manufacturing. The credit is split into two parts:
- A $3,750 credit for meeting battery part requirements
- A $3,750 credit for meeting critical minerals requirements
Vehicles that meet both criteria qualify for a combined credit of $7,500.
Additionally, the IRS places a price limit on qualifying vehicles. Passenger cars must have a manufacturer's suggested retail price (MSRP) of $55,000 or less; $80,000 or less for vans, SUVs and light trucks.
Because it can be difficult (if not impossible) for consumers to sort through this information on their own, the IRS maintains an online list of eligible vehicle makes, models and model years. If you want to claim the tax credit, you should also discuss eligibility requirements with the dealer to make sure the vehicle you're considering will qualify for the credit.
Here's a list of new vehicles that are eligible for the clean vehicle tax credit as of late 2024.
| Federal EV Tax Credits | ||||
|---|---|---|---|---|
| Make | Model | Model Years | Credit Amount | MSRP Limit |
| Acura | ZDX | 2024 | $7,500 | $80,000 |
| Audi | Q5 PHEV 55 TFSI e quattro | 2023 - 2024 | $3,750 | $80,000 |
| Q5 S Line 55 TFSI e quattro | 2023 - 2024 | $3,750 | $80,000 | |
| Cadillac | LYRIQ | 2024 | $7,500 | $80,000 |
| Chevrolet | Blazer EV | 2024 | $7,500 | $80,000 |
| Bolt EUV | 2022 - 2023 | $7,500 | $55,000 | |
| Bolt EV | 2022 - 2023 | $7,500 | $55,000 | |
| Equinox EV | 2024 | $7,500 | $80,000 | |
| Chrysler | Pacifica PHEV | 2022 - 2024 | $7,500 | $80,000 |
| Ford | Escape Plug-in Hybrid | 2022 - 2025 | $3,750 | $80,000 |
| F-150 Lightning (Extended Range Battery) | 2022 - 2025 | $7,500 | $80,000 | |
| F-150 Lightning (Standard Range Battery) | 2022 - 2025 | $7,500 | $80,000 | |
| Honda | Prologue | 2024 | $7,500 | $80,000 |
| Jeep | Grand Cherokee PHEV 4xe | 2022 - 2024 | $3,750 | $80,000 |
| Wrangler PHEV 4xe | 2022 - 2024 | $3,750 | $80,000 | |
| Lincoln | Corsair Grand Touring | 2022 - 2025 | $3,750 | $80,000 |
| Nissan | LEAF S | 2024 | $3,750 | $55,000 |
| LEAF SV PLUS | 2024 | $3,750 | $55,000 | |
| Rivian | R1S Dual Large | 2023 - 2024 | $3,750 | $80,000 |
| R1S Dual Standard | 2024 | $3,750 | $80,000 | |
| R1S Dual Standard+ | 2024 | $3,750 | $80,000 | |
| R1S Performance Dual Standard+ | 2024 | $3,750 | $80,000 | |
| R1S Quad Large | 2022 - 2024 | $3,750 | $80,000 | |
| R1T Dual Large | 2023 - 2025 | $3,750 | $80,000 | |
| R1T Dual Max | 2023 - 2024 | $3,750 | $80,000 | |
| R1T Dual Performance Large | 2023 | $3,750 | $80,000 | |
| R1T Dual Standard | 2024 | $3,750 | $80,000 | |
| R1T Dual Standard+ | 2024 | $3,750 | $80,000 | |
| R1T Performance Dual Standard+ | 2024 | $3,750 | $80,000 | |
| R1T Quad Large | 2022 - 2024 | $3,750 | $80,000 | |
| Tesla | Model 3 Long Range All-Wheel Drive | 2024 | $7,500 | $55,000 |
| Model 3 Long Range All-Wheel Drive | 2025 | $7,500 | $55,000 | |
| Model 3 Long Range Rear-Wheel Drive | 2024 - 2025 | $7,500 | $55,000 | |
| Model 3 Performance | 2023 - 2025 | $7,500 | $55,000 | |
| Model X All-Wheel Drive | 2023 - 2024 | $7,500 | $80,000 | |
| Model Y All-Wheel Drive | 2023 - 2024 | $7,500 | $80,000 | |
| Model Y Long Range All-Wheel Drive | 2025 | $7,500 | $80,000 | |
| Model Y Long Range Rear-Wheel Drive | 2024 - 2025 | $7,500 | $80,000 | |
| Model Y Performance | 2023 - 2025 | $7,500 | $80,000 | |
| Model Y Rear-Wheel Drive | 2024 | $7,500 | $80,000 | |
| Volkswagen | ID.4 AWD PRO | 2023 - 2024 | $7,500 | $80,000 |
| ID.4 AWD PRO S | 2023 - 2024 | $7,500 | $80,000 | |
| ID.4 AWD PRO S PLUS | 2023 - 2024 | $7,500 | $80,000 | |
| ID.4 PRO | 2023 - 2024 | $7,500 | $80,000 | |
| ID.4 PRO S | 2023 - 2024 | $7,500 | $80,000 | |
| ID.4 PRO S PLUS | 2023 - 2024 | $7,500 | $80,000 | |
| ID.4 S | 2023 - 2024 | $7,500 | $80,000 | |
| ID.4 STANDARD | 2023 - 2024 | $7,500 | $80,000 |
Source: IRS
How to Qualify for the 2025 EV Tax Credit
Qualifications for the new clean vehicle tax credit and the previously owned clean vehicle tax credit are similar but distinct.
How to Qualify for the New Clean Energy Vehicle Tax Credit
Follow this quick checklist to see if you may be eligible for the new clean energy vehicle tax credit.
- Choose an eligible vehicle. Because the makes, models and versions that qualify change, it's best to check FuelEconomy.gov for a current list when you're ready to buy.
- Confirm vehicle use. To qualify for the EV tax credit, your vehicle must be for personal use only, not for resale, and it must be used primarily in the U.S.
- Check IRS income limits. Your modified adjusted gross income (AGI) may not exceed the following limits:
- $300,000 for married couples filing jointly or a surviving spouse
- $225,000 for heads of households
- $150,000 for all other filers
You can use your AGI from this year or last to qualify. Start by checking your AGI on last year's tax return: It's line 11 on Form 1040. If your prior year's AGI qualifies you, you're good to go. If not, you can try to estimate your current-year AGI. Be forewarned, however, that if your AGI ends up being over the IRS limit for the clean energy vehicle credit, you'll have to repay the IRS for any credit you received.
How to Qualify for the Used Clean Energy Vehicle Tax Credit
If you're buying a used EV or FCV, you may be eligible for a tax credit of 30% of the sale price, up to a maximum credit of $4,000. The list of eligible makes and models is longer for the previously owned clean vehicle tax credit than it is for the new EV credit, including options from BMW, Hyundai, Toyota, Kia and Lexus.
The vehicle must be purchased from a licensed dealer for $25,000 or less, and its model year must be at least two years older than the calendar year (for instance, 2023 if purchased in 2025).
To qualify for the credit, you must purchase the vehicle for use and not resale. You can't be claimed as a dependent on another person's tax return. You must not be the vehicle's original owner, and you can't have claimed another used clean vehicle tax credit in the past three years.
Finally, your modified adjusted gross income may not exceed:
- $150,000 for married filing people jointly or surviving spouses
- $112,500 for heads of households
- $75,000 for all other filers
How to Claim the Federal EV Tax Credit
Claiming the EV tax credit has two critical parts. First, make sure your dealer submits a time-of-sale report to the IRS and receives approval for your tax credit. You may use the credit toward the purchase of your vehicle or wait until tax time to receive your credit. Either way, the second key action is to claim the EV credit on your tax return, so everything's square with the IRS.
Here are the steps to follow:
1. Find a Registered Dealer
To claim the credit, work with a seller that's registered with IRS Energy Credits Online. You'll have two options when your credit is approved:
- Claim the credit when you file your taxes and use it to reduce your tax liability, or
- Transfer your credit to the seller at the time of sale and use it to reduce the amount you pay for the vehicle.
If you want to transfer your clean vehicle credit to the dealer as part of your sales transaction, make sure they're willing and able to do this before you finalize a purchase.
2. Get a Time-of-Sale Report
Your tax credit must be approved at the time of sale. Your seller will use the IRS Energy Credits Online website to apply for a time-of-sale report. Keep the paper copy of your report: You'll need to submit it with your tax return, whether you transfer your credit to the seller for an immediate discount or wait until tax time to claim it.
3. Submit Form 8936 With Your Tax Return
Complete IRS Form 8936 and submit it, along with your time-of-sale report, with your tax return to officially claim the tax credit. The credit is nonrefundable, so you can't use it to get money back if your final tax bill is less than the credit or apply it to a future tax bill.
Frequently Asked Questions
In general, EVs and plug-in hybrid EVs save you money on fuel costs but typically cost more to buy. EV tax credits can help level the playing field on purchase costs, bringing fuel savings into focus. The more you drive, the more meaningful fuel savings will be.
EVs may also save you money on maintenance costs. Because EVs have fewer working parts than gas-powered vehicles, they typically require less maintenance and save money on items like oil changes. On the other hand, EVs can be more expensive to insure. If you're choosing between an EV and a conventional gas-powered car, you may want to do a more detailed cost analysis comparing your purchase costs and expected costs for fuel, maintenance and insurance.
The new EV tax credit doesn't apply to leases. But, since more than 46% of EV buyers lease, according to Experian data, it's worth asking whether any federal tax credits benefit lessees.
In fact, there is a workaround. Leasing companies can apply for the federal commercial clean vehicle tax credit of up to $7,500 and can (at their discretion) pass the savings on to you when you lease an EV. The commercial clean vehicle tax credit has fewer restrictions on qualifying makes and models. And, because the leasing company gets the credit instead of you, you aren't subject to income limitations or maximum allowable MSRPs to benefit from this credit.
On the other hand, it's up to the leasing company to extend their savings to lessees. If you're interested in leasing an EV, check for deals in your area and ask if pricing includes savings from the federal tax credit.
Income limits are different depending on whether you're purchasing a new or used EV. To qualify for the new clean vehicle tax credit, your modified AGI can't exceed the following limits:
- $300,000 for married couples filing jointly or a surviving spouse
- $225,000 for heads of households
- $150,000 for all other filers
You can meet these income limitations in the current year or last year; you don't have to meet the limits in both.
For the previously owned clean vehicle tax credit, your adjusted gross income should not exceed these limits:
- $150,000 for married filing people jointly or surviving spouses
- $112,500 for heads of households
- $75,000 for all other filers
The Bottom Line
Claiming the EV tax credit isn't effortless, but getting up to $7,500 in credits may be worth a little extra work. Now that credits can be applied to your purchase, EVs are not only easier to afford; they're also easier to finance, with up to $7,500 less required from your lender.
If you're planning to finance an EV, now's a great time to check your credit score and report. Borrowers with good credit tend to get the best loan rates and terms, which can also help make the EV you've been eyeing more affordable and attainable.