Tax Credits for Electric Vehicles Purchased in 2024

Shopping for a new electric vehicle in 2024? Here's what you need to know to get your tax credit.

With the rise in popularity of electric vehicles and the increase in,  and changes to, various tax incentives, there is more interest than ever in tax credits for electric vehicles. The Inflation Reduction Act made significant changes to the law. Here's what you need to know about tax credits for new electric vehicles in 2024:

Who Qualifies: To qualify for the credit, you must:

• Purchase the vehicle for your own use, not for resale.

• Use the vehicle primarily in the United States.

• Your modified adjusted gross income may not exceed $300,000 (married filing joint), $225,000 (heads of household), or $150,000 (single or married filing separately).

Credit Amount: The federal tax credits for electric vehicles can range from $2,500 to $7,500, depending on the battery capacity of the vehicle.

Qualified Vehicles: For a vehicle to qualify, a vehicle must:

• Have a battery capacity of at least 7 kilowatt hours

• Have a gross vehicle weight rating of less than 14,000 pounds

• Be made by a qualified manufacturer. 

• Undergo final assembly in North America

• Meet critical mineral and battery component requirements (as of April 18, 2023)

• The seller must report required information to you at the time of sale and to the IRS

• The vehicle's manufacturer suggested retail price (MSRP) can't exceed $80,000 for vans, sport utility vehicles, and pickup trucks, or $55,000 for other vehicles

To find out which specific cars are currently eligible, you can visit the official U.S. Department of Energy (DOE) page that provides a detailed list, which is regularly updated: https://fueleconomy.gov/feg/tax2023.shtml

You should note that the credit is nonrefundable, which means you must have tax liability to receive the maximum amount of the credit.

You should also be aware that the tax credit cannot be carried forward. In other words, if you cannot use it in the year that you purchased the vehicle, you lose the credit.

It's important to note that eligibility can change, so it's a good idea to confirm the status of a vehicle close to the time of purchase. Additionally, some states may offer additional incentives.

It's always wise to consult with a tax professional to understand how the credit would apply to your specific tax situation. If you need more personalized advice or assistance with claiming the credit, feel free to contact us for a paid planning session!

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