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IRS expands eligibility for EV tax credits

  • / Updated:
  • Staff Report 

The Internal Revenue Service (IRS) has clarified the eligibility requirements for electric vehicles (EVs) for the Clean Vehicle Tax Credit. The credit offers drivers up to $7,500 in tax rebates after purchasing a qualifying EV.

Previously, the Federal Government had mismatched the designations of certain EVs, affecting their eligibility and causing confusion among customers. Additionally, some EVs were excluded due to exceeding the maximum manufacturing costs allowed under the credit.


However, the IRS has since broadened the rules to increase eligibility for popular EVs, including Tesla’s Model Y and General Motors’ electric Cadillac. The government has created a new category for EVs from manufacturers such as GM, Volkswagen, Rivian, Ford, Jeep, BMW, and others, with a retail price of less than $80,000, that qualify for the tax credit.

Drivers purchasing brand-new EVs will receive $7,500 in tax credits after filing taxes for their purchase, while those buying used EVs manufactured before 2021 can receive up to $4,000. To qualify for the credit, all purchases must be made at a licensed car dealership.

Ide Volkswagen Sales Manager, Joe Preteroti, comments on the change, “The biggest change we’re seeing is being applied to leases. This particular rebate will lower somebody’s rebate anywhere from $180-$200 with the rebate. So, it’s made a big strong difference getting people back in because everything is payment driven.”

To qualify for the tax credit as a co-signer on a brand-new EV purchase, the combined annual income of both individuals must be under $300,000, or less than $150,000 individually. For used EV purchases, the household income must be under $150,000 or less than $75,000 individually.

Below is a list of eligible EVs, including those with a manufacturer’s suggested retail price (MRSP) of $55,000 or less and those with an MRSP of $80,000 or less.



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