2024 Electric Vehicle Tax Credit – Extending the EV Clean Car Rebate For New and Used Autos

Under the Inflation Reduction Act (IRA), the EV Tax Credit was extended for several more years. It will also be expanded to cover both new and used cars.

The original EV tax credit, known as the plug-in electric vehicle credit, has been rebranded to the Clean Vehicle Credit (CVC) under the IRA bill and covers battery/fuel-cell and hydrogen vehicles. It will be available till 2032.

Additional qualification criteria was also added to promote domestic production of EV vehicles and batteries. This will be phased in over the next 5 to 8 years as discussed in the next section.

The maximum amount of the extended EV tax credit is $7,500 credit for new vehicles. A new $4,000 or 30% of purchase price (whichever is less) credit was added for used vehicles.

There is a cap on the price of eligible vehicles at $55,000 for new cars and $80,000 for new trucks, vans and SUV’s. These limits mean high-end electric vehicles would likely not qualify for this credit. Used EV’s will have a $25,000 limit.

The credit will only be available for qualifying EV cars purchased in 2023 and beyond.

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2024 Tax Season Updates

The landscape of EV tax incentives is constantly evolving, making it crucial to understand the latest updates for the 2024 tax season. Buckle up, and let’s explore the electrifying world of EV tax deductions!

The Big Ticket: The EV Tax Credit

This year, the federal EV tax credit undergoes significant changes. Gone is the single credit structure; instead, a two-pronged approach based on battery capacity and sourcing takes its place.

• Battery Capacity Credit: Vehicles with battery capacity of at least 7 kWh qualify for a base credit of $2,500. Each additional kWh above 5 earns an additional $417, with a maximum credit of $7,500.

• Sourcing Credit: This new credit rewards EVs with materials and assembly originating in North America. For vehicles meeting specific battery and sourcing requirements, a separate credit of up to $5,000 is available, bringing the total potential credit to a whopping $12,500!

Important Note: These credits are non-refundable, meaning they can only reduce your tax liability to zero, not generate a refund. Additionally, income limitations apply, phasing out the credit gradually for higher earners.

Beyond the Federal Buzz: State and Local Incentives

The federal government isn’t the only party offering EV incentives. Many states and municipalities offer generous tax breaks, rebates, and other perks like free parking or toll discounts. Research your local programs to maximize your savings. Don’t forget to inquire about potential charging station installation rebates offered by utilities or your state.

Charging Forward: Deductions for EV Charging Costs

Whether you juice up at home or public stations, you can potentially deduct EV charging costs. For home charging, two options exist:

• Home Charger Installation: Claim a 30% credit (up to $300) on the cost of installing a qualified home charging station in 2024. Remember, this is separate from the EV tax credit.

• Electricity Costs: If you use a separate meter for home charging, deduct the electricity cost as business expense if using your EV for business purposes. However, deducting personal charging costs requires more complex calculations and specific record-keeping. Consult a tax professional for guidance.

Public Charging: For public charging costs, keep detailed records of dates, locations, and amounts spent. While the IRS hasn’t explicitly approved deducting personal public charging costs, some argue it falls under miscellaneous itemized deductions (subject to a threshold). However, this strategy remains uncertain and requires careful consideration.

Eligibility Criteria (2023 and beyond)

The IRS has released additional guidelines (Rev Proc 2022-42) that outlines more details on eligibility rules for manufacturers and sellers of EV/Clean cars. These guidelines provide the details needed for EV cars to be eligible for tax credits and other incentives provided under the IRA bill. Details are provided below.

This credit would be available for single filers making less than $150K a year. Head of household filers would need to make less than $225K and $300K would be the maximum MAGI for joint filers to qualify.

In addition to income and price thresholds, the IRA bill includes additional criteria for the domestic manufacturing and final assembly of EV cars.

This is encourage domestic production of these vehicles and support the next generation of mass-produced EV cars being made by Tesla Ford, Toyota and GM.

The criteria for the domestic manufacturing and assembling of vehicles will gradually increases over the next few years as follows

  • For vehicles in service before January 1st, 2024, 40% of the vehicle should be made and manufactured domestically.
  • For 2024, this rises to 50% and then to 60% in 2025.
  • For 2026 it will be 70% and then rise to 80% in 2027 and beyond.

Batteries used in EV’s will also be required to meet certain raw materials input criteria and also the manufactured or assembled in North America criteria. However the criteria is more strict, with 100% of the battery required to be made domestically by 2029.

Based on the 2027 criteria (70% domestic manufacturing), only 5% of current EV cars qualify. So don’t rush out an buy your dream EV before confirming it will meets the manufacturing criteria to get this credit.

Used cars will have a price cap of $25,000 for credit qualification and would need to be at least two years old.

You can see more on the eligibility criteria in Part 4 (starting page 381) of the final bill.

Which Vehicles Qualify for the EV Credit?

The US Dept of Energy (DoE) provides a list of vehicles that qualify for the credit. This list will be updated as manufacturers adjust vehicle specifications to meet the required criteria.

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Model YearVehicleComments
2023BMW 330e
2023BMW X5 xDrive45e (PHEV)
2023Cadillac Lyriq2022 Manufacturer sales cap met
2023Chevrolet Bolt EV2022 Manufacturer sales cap met
2023Ford E-Transit
2023Jeep Grand Cherokee 4xe
2023Jeep Wrangler 4xe
2023Lincoln Aviator PHEV
2023Lucid Air
2023Mercedes EQS SUV
2023Nissan Leaf
2023Tesla Model 32022 Manufacturer sales cap met
2023Tesla Model S2022 Manufacturer sales cap met
2023Tesla Model X2022 Manufacturer sales cap met
2023Tesla Model Y2022 Manufacturer sales cap met
2023Volkswagen ID.4
Electric Vehicles Assembled in North America Approved for Clean Vehicle EV Credit

How to Claim the EV Clean Vehicle Credit

Car buyers have the option to get the credit as a price reduction at the time of purchase (e.g. at an authorized dealership) or claiming it via their tax return if a private sales or you want to wait till end of the year to see if you qualify.

The credit claimed for the car at the time of purchase will need to be reported by the dealer to the IRS and cannot (and should not) be claimed again on the purchaser’s tax return (i.e. no double dipping!).

If your income is higher than projected at the end of the year (or lower) you will need to repay the part of the credit you are ineligible for or claim any additional amounts if your income is lower than expected.

The CVC is a tax credit, which means that it is not included in the gross income and is paid irrespective of if you are getting a refund or now.

This credit can only be claimed once per vehicle and will be based on the Vehicle Identification Number (VIN). So if you are buying a used EV in coming years, make sure you check that the credit was not already claimed for the car.

2022 EV CVC Criteria and Manufacturer Caps

While the focus of this article is on the 2023 EV tax credit expansion, the credit is still available in 2022, but subject to manufacturer caps (which are eliminated in 2023).

For autos purchased before December 31, 2022, the credit amount will range from $2,500 to $7,500, based on each vehicle’s battery capacity and weight. Manufacturers will have a 200,000 cap for vehicles that qualify for this tax credit rebate. See table above for some vehicles (like Tesla) that reached this cap for 2022.

EV Dealer Requirements and Disclosures

According to the bill, dealers will need to disclose, at the time of the sale, the MSRP of the vehicle, the value of the credit allowed and any other incentives available for purchasing the vehicle and the amount of the tax credit the purchase (taxpayer) is able to claim based on their projected income.

Dealers cannot claim the tax credit as a deductible business expense. However prior limits capping EV sales for manufacturers has been eliminated from 2023 onwards (still in place for 2022)

This will allow buyers (i.e. tax filers claiming the credit) to know what clean vehicle tax credit rebate they will get before buying the car.

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2 thoughts on “2024 Electric Vehicle Tax Credit – Extending the EV Clean Car Rebate For New and Used Autos”

  1. Hello! I am from USA I saw your blog. It was great, informative and really useful information that you shared with us. I introduced your website to my friends and he was totally impressed keep in touch

  2. GM makes cars in Mexico how is it determined if it meets rebate rules. Blazer made in Mexico does that make it ineligible for rebates. If the is yes what about treaty rights of Mexico?


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