How to Get Up to $7,500 in EV Tax Credits in 2024 & 2025

Government subsidy programs are making electric vehicles (EVs) much easier to purchase. If you intend to purchase an EV, you can qualify for up to $7,500 in EV Tax Credits under new tax laws. The aim is to improve public transportation while providing an easier access to EVs to consumers, which is why the government has made the incentives available.

Today, we highlight everything you need to know about U.S. EV Tax Credits, like how to claim them, who is eligible, and what recent changes are made that would affect buyers in 2024 and 2025.

How Do EV Tax Credits Work?

The purchase of an electric vehicle can lower the taxes you owe to the IRS due to the “EV Tax Credits.” The United States government does not reduce the price of the EV at purchase, but rather applies the cost to your annual taxes.

The U.S. government does allow a maximum credit of $7,500, however certain EVs do not qualify and some requirements must be fulfilled for full benefits.

In 2024 And 2025, Who Is Able To Benefit From The U.S. EV Tax Credits

Both the vehicle put for purchase and the buyer must fulfill certain criteria for the buyer to be eligible for fully or partially EV Tax Credits.

1. Vehicle Eligibility Requirements

To qualify for US EV Tax Credits, the EV must:

Be assembled in North America (Canada, Mexico, or the U.S.).

Have a battery capacity of at least 7 kWh.

Qualify for the section of the battery sourcing requirement (some materials must come from the United States or approved trading partners).

Be acquired for personal purposes without the intention to resell.

Possess an MSRP (Manufacturer’s Suggested Retail Price) that meets the following criteria:

exceed $80,000 for vans, SUVs, and pickup trucks.
exceed $55,000 for sedans and smaller vehicles

2. Income Eligibility for Buyers

To qualify for US EV Tax Credits, your Modified Adjusted Gross Income (MAGI) cannot exceed the following thresholds:

Filing Status	Income Limit
Single	$150,000
Head of Household	$225,000
Married (Filing Jointly)	$300,000

Which Cars Qualify for EV Tax Credits in 2024 & 2025?

Not every electric vehicle can get the standard $7,500 rebate. The United States Treasury modifies the list of vehicles which qualify based on Battery sourcing and Place of Manufacture.

Some EVs meeting the requirements (as of 2022):

Tesla Model 3 (Selected Versions)

Tesla Model Y

Chevrolet Bolt EV and EUV

Ford F-150 Lightning

Rivian R1T and R1S

Volkswagen ID.4

Note: There may be better offers than what is listed above. The latest IRS approved list should be checked before making any purchases.

How to Claim U.S. EV Tax Credits in 2024 and 2025.

The tax credit can be claimed in 2024 through two basic options.

Option 1: Include the Claim in Your Tax Return

If you buy a qualifying EV during 2024, you can claim the credit when filing your tax returns for the year 2024 in the first quarter of 2025. Here is how to do it:

Obtain IRS Form 8936 (Known as the Qualified Plug-In Electric Drive Motor Vehicle Credit)

Fill out vehicle form. Provide the make, model, VIN and date of purchase.

State the credit claim. Work out how much you can claim in the tax credit considering the vehicle that you qualified for.

Send it all along with the 1040 tax form. Attach the previously mentioned form to your 1040 form.

Submit your forms. In return, expect the credit as a cut in ‘U.S Tax’ bill.

Option 2: Expect it while at the dealership. (From 2024)

Starting in 2024, taxes can be claimed when buying the car instead of having to wait for a tax refund after purchasing the vehicle.

This means that the dealer can immediately implement the $7,500 discount.

Ensure the dealer has credentials from the IRS to facilitate tax credits in advance.

Check if the vehicle is eligible for a credit in full or in part.

Verify income (dealers could ask for some validation documents).

Proceeds with the purchase of the EV and saves money immediately!

Tax Credit is Applicable to Secondary Market EVs!

Buying a used EV may qualify you for a tax credit with a maximum rebate of $4,000 under the new U.S EV Tax Credits Program.

Criteria for Used EV Tax Credits:

Eligible vehicles shall be a minimum of 2 years old.

Acquired through a registered dealer (does not include private sales).

The invoice amount must not exceed $25,000.

The purchaser should not earn more than the following:

$75,000 for Singe (Single)
$112,500 for Head of Household
$150,000 for Married Filing Jointly

Tip: As opposed to the new EV credits, the used EV credit is non-refundable, which will offer a reduction to your U.S. Tax burden but will not provide a payment.

Significant Changes in U.S EV Tax Credits In 2024 And 2025

1. Credits No Longer Available for Foreign Assembled EVs

Your EV will not be eligible for the credit if it is not assembled in North America.

This means the likes of the Hyundai Ioniq 5 and the Kia EV6 are not getting federal refunds anymore.

2. Instant Dealer Discounts

As noted before, from 2024 onwards, clients are able to claim their rebate at the point of sale instead of waiting to do so during filing.

3. Battery Sourcing Rules Get Stricter

After 2025, a higher percentage of the battery materials for EVs will have to come from the U.S. or allied countries. This means fewer models may be eligible for full credits.

Conclusion – Should you get an EV in 2024 or 2025?

When it comes time to buy, 2024 stands out the most, especially for prospective EV buyers. You can still make the most out of tax rebate credits and getting a “with cash” price from the dealer has never been easier.

Those looking to purchase an EV in 2025 should have an eye on policy changes, as the stricter rules may limit the number of qualifying models available. Always look for the qualifying requirements before purchase.

If you plan buying an EV now, share your thoughts in the comment section!