The Federal government wants car buyers to make the switch to electric power and has been helping out EV buyers for years. Depending on what car you buy, there are potential tax credits on your EV, but how do you know what you can get, and how do you take advantage of them?

New EVs or Plug-in Hybrid Tax Credits

If you choose the right electric vehicle, you can get up to $7,500. The list of qualifying vehicles for the 2024 tax year is not as long as it used to be, but the list is still worth checking out. To qualify for the credit, you not only have to buy a new EV that’s on the list, but you also have to meet certain income requirements. In order to meet the income eligibility requirements, individuals must report an adjusted gross income of $150,000 or less, and for those filing a joint return, they must report an adjusted gross income of $300,000 or less. Heads of household can file up to $225,000.

What Changed in 2024?

There are a few changes to the requirements in 2024. If any of the battery’s components came from a foreign entity of concern, such as China, North Korea, or Russia, the entire EV is not eligible for the tax credit.

Another change for 2024 is the ability to transfer the EV tax credit to a dealer at the point of the sale so they can turn the credit into an immediate discount on the vehicle. Instead of having to wait to file their return to see the benefit of the potential tax credits on their EV, they can reduce the amount they pay upfront.

What Makes an EV Qualify for the Credit?

The list of eligible EVs now has very specific requirements. The final assembly must take place in North America. If this is not the case, it is no longer on the list. The next requirement caps the MSRP, which maxes out at $80,000.

All these requirements made the list of eligible vehicles quite short, but it includes a variety of models such as the Acura ZDX, Cadilla Lyriq, Chevy Blazer EV, and the Ford Escape Plug-in Hybrid.

Used Vehicles Are Eligible, Too

You don’t have to buy a brand-new vehicle to see the potential tax credits on an EV. There are used electric vehicle rebates, too. As long as a used EV is under $25,000 you could get up to a $4,000 tax credit. Just like with new EVs, income eligibility must be met. Eligible used EVs must be at least two years old, and they must be purchased at a dealership. If you like to buy your used cars through private sales, you won’t be eligible for the tax credit.

It’s also worth noting that used EV buyers can only qualify for one of these credits every three years, and the EV will only qualify for the used credit once in its lifetime.