Federal Electric Vehicle & Hybrid Incentives
The Federal government offers various incentives for purchasing Electric Vehicles (EVs) and Hybrids. These incentives include tax credits, rebates, and exemptions. These benefits are intended to encourage people to switch to more environmentally friendly vehicles and reduce their carbon footprint. There are a variety of factors that can help determine which incentives you may qualify for.
Final Assembly Location.
New electric and hybrid vehicles have a checkmark in the table showing Federal Tax Credits for Plug-in Electric and Fuel Cell Electric Vehicles Purchased in or after 2023. For vehicle models that may be assembled outside North America, there are two ways to check the final assembly point for a specific vehicle:
- The final assembly point will be listed on the vehicle information label attached to each vehicle on a dealer's premises.
- You can search the vehicle identification number (VIN) of the vehicle on the Alternative Fuels Data Center's Electric Vehicles with Final Assembly in North America page.
Battery Component and/or Critical Minerals Sourcing.
The critical minerals requirements of Section 30D look to the percentage of the value of the applicable critical minerals contained in an EV battery that were extracted or processed in the United States or in a country with which the United States has a free trade agreement (FTA) in effect (an FTA country), or that were recycled in North America.
Adjusted Gross Income Limits.
You may not claim the credit if your modified adjusted gross income (AGI) exceeds certain thresholds. This limitation is based on the lesser of your modified AGI for the year that the new clean vehicle was placed in service or for the preceding year. The relevant modified AGI thresholds are as follows:
- Married filing jointly or filing as a qualifying surviving spouse or a qualifying widow(er) - $300,000
- Head of household - $225,000
- All other taxpayers - $150,000
Your modified AGI is the amount from line 11 of your Form 1040 plus:
- Any amount on line 45 or line 50 of Form 2555, Foreign Earned Income.
- Any amount excluded from gross income because it was received from sources in Puerto Rico or American Samoa.
New Plug-in and Fuel Cell Electric Vehicles Purchased in or after 2023.
All-electric, plug-in hybrid, and fuel cell electric vehicles purchased in 2023 or after may be eligible for a federal income tax credit of up to $7,500. The credit availability will depend on several factors, including the vehicle's MSRP, its final assembly location, battery component and/or critical minerals sourcing, and your modified adjusted gross income (AGI).
Federal Tax Credits for Pre-owned Plug-in Electric and Fuel Cell Vehicles.
Pre-owned all-electric, plug-in hybrid, and fuel cell electric vehicles purchased on or after January 1, 2023, may be eligible for a federal income tax credit. The credit equals 30% percent of the sale price up to a maximum credit of $4,000. The credit is nonrefundable, so you can't get back more on the credit than you owe in taxes. Also, you can't apply any excess credit to future tax years.
Federal Tax Credits for New All-Electric and Plug-in Hybrid Vehicles Purchased Before 2023.
All-electric and plug-in hybrid vehicles purchased new from 2010 through 2022 may be eligible for a federal income tax credit of up to $7,500. The credit amount will vary based on the capacity of the battery used to power the vehicle.
Electric Vehicle and Hybrid Benefits.
In general, EVs and hybrids are cheaper to operate and maintain than gas-powered cars, making them an attractive option for many consumers. Depending on the make, model, and year of your new EVs or hybrid, you may also qualify for additional incentives based on your state. We encourage you to take advantage of these incentives and do your part to protect the environment while saving money on your vehicle expenses.
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