Federal Incentives

Federal Incentives

Electric Vehicle Tax Credit

Federal Tax Credits and Incentives have been dramatically changed as part of the Inflation Reduction Act of 2022. With this new law, the EV Tax Credit and EV Charger Credit program have been expanded to increase purchase incentives for electric vehicles. These rules have been updated for 2024. Here are the highlights:

  • The Point of Sale rebate option is now available. Qualified buyers can now claim the tax credit as a rebate at the time of purchase! Participating dealers will apply for the credit to get reimbursed for providing the rebate.

  • Buyers will need to be under an income cap - their modified adjusted gross income (AGI) must be under:

    • $300,000 - married couples filing jointly

    • $225,000 - heads of household

    • $150,000 - all others

  • Tax liability does not matter - you may apply for the tax credit or the rebate even if you don’t have a tax liability.

  • Used EVs continue to qualify for a tax credit of $4000 or up to 30% of the price. There is a price limit of $25,000 and an income (AGI) cap of $150,000 for households and $75,000 for individuals. The vehicle should not have been sold as a used car previously.

  • Qualifying Vehicles - The number of eligible vehicles has fallen this year due to manufacturing and materials sourcing requirements. There continue to be purchase price caps ($55,000 for cars and $80,000 for SUVs and trucks). Here are the vehicles that qualify as of January 2024:

    • $7500 Credit-Qualified Vehicles

      • Chevy Bolt

      • Chevy Bolt EUV

      • Chrysler Pacifica

      • Ford F150 Lightning (Standard and Extended Range)

      • Tesla Model 3 Performance

      • Tesla Model Y (RWD, AWD, and Performance)

      • Tesla Model X (Long Range)

      • Volkswagen ID.4

    • $3750 Credit-Qualified Vehicles

      • Ford Escape Plug-in Hybrid

      • Jeep Grand Cherokee PHEV 4xe

      • Jeep Wrangler PHEV 4xe

      • Lincoln Corsair Grand Touring

      • Rivian R1S

      • Rivian R1T

EV leasing continues to allow for a tax credit benefit. In this case, a dealer builds the credit into the lease considerations and applies for the credit afterward. This option offers a greater level of flexibility as there are no restrictions on income, vehicle price, or manufacture and sourcing requirements.

For the latest EV tax credit information, visit this Department of Energy webpage www.fueleconomy.gov/feg/tax2023.shtml.

Review the IRS list of manufacturers that meet the final assembly and MSRP requirements (or intend to be qualified) at www.irs.gov/credits-deductions/manufacturers-and-models-for-new-qualified-clean-vehicles-purchased-in-2023-or-after.

Medium-Heavy Vehicle Tax Credit

A tax credit of up to $40,000 is available to businesses and tax-exempt organizations for vehicles with a gross vehicle weight rating of 14,000 pounds or more.

Some highlights:

  • The vehicle must be used for business.

  • The vehicle must be a plug-in or fuel-cell electric.

  • Domestic battery manufacturing content requirements don’t apply

For more information, visit www.irs.gov/credits-deductions/commercial-clean-vehicle-credit.

Federal Tax Credits for EV Charging Stations

  • Residential - 30% up to $1000 per EV charger

  • Commercial - Up to $100,000 per EV charger. Requirement for the site to be in low-income or non-urban areas.

Details can be found at www.irs.gov/credits-deductions/alternative-fuel-vehicle-refueling-property-credit#amount

Photo courtesy of Roger Starnes Sr.

Rules are subject to change and applicability is situational, consult with your accountant or tax attorney for specifics.