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The new rules are complicated. Here’s how to make sense of them if you’re shopping for an electric vehicle.

The Department of Treasury published new rules last year that will determine which new electric vehicles, purchased for personal use, will qualify for a $7,500 tax credit. They went into effect on April 18, 2023, and last for the next decade or so.
These new tax credit rules are complicated. The list of cars that qualify for the new tax credit can change from year to year — and even month to month. Many buyers in the EV market might have a few questions, including: Should I buy that new car now, or should I wait? Which cars qualify for the current tax credit, and which ones will earn the new one?
This is Heatmap’s guide to the new tax credit, why it matters, and what to keep in mind as you go EV shopping.
If you’re an ordinary American buying a brand-new EV to run errands and pick up the kids, these new rules apply to you. They will determine which cars you can get a federally funded discount on.
If you’re not buying a new car for personal use — because you’re getting it for your business, say, or because you’re buying a used EV — these new rules don’t apply to you. But you may qualify for other new subsidies. We get into those below.
And even if you are in that first category, you may discover it’s much cheaper to lease a new EV instead of buying it outright. We get into why below, too.
They completely change how the United States approaches the EV industry.
During the Bush and Obama administrations, the U.S. was focused mostly on getting automakers to begin to experiment with EVs. So it discounted the first 200,000 or so electric vehicles that each manufacturer sold by up to $7,500. If a company had cumulatively sold more than that number over time, as Tesla and General Motors eventually did, then the discount expired. By 2022, that had led to a peculiar situation where foreign automakers, such as Hyundai, could use the subsidy, while some of the largest American automakers couldn’t.
Now, U.S. policy is focused on two goals: (1) building up a domestic supply chain for EVs and (2) getting more EVs on the road. So the tax break is completely uncapped — any automaker can use it as many times as possible if they meet the criteria.
But many new requirements apply: Only cars that undergo final assembly in North America will qualify for any of the tax credit. Then, cars with a battery that was more than 50% made in North America will qualify for a $3,750 subsidy. And cars where at least 40% of the “critical minerals” used come from the U.S. or a country with whom we have a free-trade agreement will qualify for another $3,750 subsidy.
Those percentage-based requirements will ramp up over time. By 2029, for instance, 100% of a car’s battery and battery components must be made in North America.
Because Congress said so. The Inflation Reduction Act, which Democratic majorities in the House and Senate passed last year, mandated this change to the EV tax credit as part of its broad expansion of American climate policy.
Initially, fewer EVs will receive a subsidy under the new rules, Biden officials say. On a press call with reporters, a senior Treasury official argued that more cars will eventually qualify under the new rules than qualified under the old ones.
This year, at least 15 car or light trucks will receive some or all of the credit. Only some of those vehicles will qualify for the full $7,500 tax credit; some will qualify for a partial $3,750 tax credit. Here is the full list of qualifying models, along with the amount of the tax credit that they will earn:
• Audi Q5 TFSI e Quattro PHEV ($3,750)
• Cadillac LYRIQ ($7,500)
• Chevrolet Bolt ($7,500)
• Chevrolet Bolt EUV ($7,500)
• Chrysler Pacifica PHEV ($7,500)
• Ford Escape Plug-in Hybrid ($3,750)
• Ford F-150 Lightning, Standard & Extended Range ($7,500)
• Jeep Wrangler PHEV 4xe ($3,750)
• Jeep Grand Cherokee PHEV 4xe ($3,750)
• Lincoln Corsair Grand Touring ($3,750)
• Rivian R1S, Dual Large & Quad Large ($3,750)
• Rivian R1T, Dual Large, Dual Max, & Quad Large ($3,750)
• Tesla Model X Long Range ($7,500)
• Tesla Model 3 Performance ($7,500)
• Tesla Model 3 Long Range AWD ($3,500)
• Tesla Model Y AWD, Rear-Wheel Drive, & Performance ($7,500)
• Volkswagen ID.4 AWD PRO, PRO, S, & Standard ($7,500)
Some vehicles that earned the full tax credit in 2023, such as the Ford Mustang Mach E, don’t qualify for any benefit as of January 2, 2024.
Yes. A few examples: The Hummer EV, which costs more than $110,000 a piece, won’t qualify for either the new or old tax credit — it’s too expensive. And the Polestar 2 won’t qualify because it’s assembled in China.
Yes. Starting this year, the U.S. is preventing cars that receive too much manufacturing input from a “foreign entity of concern” — that is, China — from qualifying for any of the tax credit. This has reduced the number of vehicles that qualify for the $7,500 bonus.
This year, the government will also allow buyers to refund their EV tax credit at the dealership. That means buyers can now get up to a $7,500 discount at the moment when they buy their car instead of waiting until they file their taxes in the following year.
Yes. A married couple must have an adjusted gross income of less than $300,000 a year, and a single filer must have an AGI of less than $150,000 a year, to qualify for any aspect of the subsidy. A head-of-household must have an income of less than $225,000 a year.
Yes. Under the proposed rule, cars must have an MSRP below $55,000 to qualify for the credit. Vans, pickup trucks, and SUVs must have an MSRP below $80,000.
Yes. The Inflation Reduction Act also included a new $7,500 tax credit for EVs used for any commercial purpose. The Treasury Department is expected to interpret that provision to cover leasing, but it hasn’t announced the guidelines for that rule yet, so we don’t know for sure.
But the provision will probably tilt new EV drivers toward leasing their car rather than buying it outright, because the dealer should — emphasis on should — offer relative discounts on leasing vehicles as compared to buying them.
Yes. There’s also a new $4,000 tax credit for buying a used EV that costs $25,000 or less. It went into effect on January 1, 2023, so you can go ahead and use it today.
But note that it has even stricter income limits: Married couples can only take advantage of it if they make $150,000 or less, and other filers if they make $75,000 or less.
Here’s the list of cars that qualified for the $7,500 tax credit before April 18, 2023, according to the Department of Energy.
• Audi Q5 TFSI e Quattro (PHEV)
• BMW 330e *
• BMW X5 xDrive45e**
• Cadillac Lyriq
• Chevrolet Bolt
• Chevrolet Bolt EUV
• Chevrolet Silverado EV
• Chrysler Pacifica PHEV
• Ford E-Transit
• Ford Escape Plug-In Hybrid *
• Ford F-150 Lightning
• Ford Mustang Mach-E
• Genesis Electrified GV70
• Jeep Grand Cherokee 4xe
• Jeep Wrangler 4xe
• Lincoln Aviator Grand Touring *
• Lincoln Corsair Grand Touring *
• Nissan Leaf
• Nissan Leaf (S, SL, SV, and Plus models)
• Rivian R1S
• Rivian R1T
• Tesla Model 3 Long Range
• Tesla Model 3 Performance
• Tesla Model 3 RWD
• Tesla Model Y All-Wheel Drive
• Tesla Model Y Long Range
• Tesla Model Y Performance
• Volkswagen ID.4
• Volkswagen ID.4 AWD, Pro, and S models
• Volvo S60 PHEV *
• Volvo S60 Extended Range
• Volvo S60 T8 Recharge (Extended Range)
* These cars don’t qualify for the full $7,500 subsidy, although they all receive at least a $5,400 tax credit.
** Only some BMW X5 xDrive45e vehicles qualify — it depends where the car was made. Check the VIN or ask the dealership to confirm it was made in North America before buying.
This story was originally published on March 31, 2023. It was last updated on March 5, 2024, at 10:00 a.m. ET.
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Talking with Dan Hartinger, the land conservation group’s senior policy director.
This week’s Q&A is with Dan Hartinger, senior policy director for The Wilderness Society, a prominent land conservation organization in D.C. that this week called for a moratorium on data center development on public land. The public statement was relatively scant on details about the group’s stance, and a decade of reporting on policy in Washington has taught me that its positions are quite influential, especially in more traditional outdoor recreation and conservationist circles that are also often bipartisan. So I reached out and asked if someone could further explain the society’s position, and Dan obliged.
The following chat was lightly edited for clarity.
Let’s start at the beginning. What brought The Wilderness Society to make a call for a moratorium against data centers on public lands?
Like many others, we were concerned about news reporting on industrial-scale data centers being proposed on public lands. When we saw the scale of what was proposed – covering tens of thousands of acres of public lands, being pushed through without public input about whether this was an acceptable use of this land – it became clear we needed to hit the brakes and give the public a chance to evaluate this.
Our mission and vision for The Wilderness Society is not on the broader debate about AI data centers. It’s on public lands. Those are a shared resource we need to manage for the benefit of all Americans. We need to be careful not to sacrifice those for poorly understood impacts from the data center boom.
You called for Congress to do this during the lame duck session. Why call for this now?
We think this is urgently needed now. If we allow public lands to be sacrificed for a data center boom, we could very well never get them back, so we think it’s urgently necessary a moratorium is enacted. We’d love to see the administration institute a moratorium, and we’re rightly skeptical given what boosters they’ve been. It really just kind of leaves it in the hands of Congress.
There’s legislation introduced by Rep. Rashida Tlaib to institute a moratorium on data centers on federal lands, including Interior, Department of Defense, and Energy property. Do you support that bill?
We don’t have any expertise on Department of Energy or Department of Defense lands. I know Sen. Ron Wyden introduced a bill recently to ban data centers on public land managed by the Agriculture and Interior Departments. Our focus right now is on calling for a moratorium. When you’re contemplating a novel industrial use, the public needs time to understand.
Your call doesn’t include the Department of Energy or Defense lands?
We’re not national security experts. We haven’t waded in on whether there are some limited use cases where maybe there’s national security reasons, I guess.
So you want this to happen in a lame duck, when right now the likeliest thing Congress debates is instead building things faster through permitting reform. Does your organization have any stance on the impacts that the permitting reform effort underway in Congress could have regarding data centers on public lands?
We’re still wading through our stance on the [Senate] bill. I don’t know I have much to share on that. We’re concerned about some of the impacts that bill could have on public lands, but there’s also a whole lot of other factors from that bill to weigh.
Talking to folks who are more public about their stances on the bill, and looking at the set of projects even preliminarily underway on federal lands, it’s hard to imagine that changing NEPA and other environmental laws makes things on public lands go slower. I understand you’re still figuring out where you as an organization stand on the bill, but can you speak to the current state of infrastructure development on federal land and changes the administration has made to permitting?
I think through the lens of data centers, narrowly, all of the project reviews and approvals – which is a limited number – have been attempted without additional NEPA analysis. We saw with the Townsite project in Nevada, they tried to claim a solar farm was essentially the same as a data center. There have been authorizations for data centers’ geotechnical surveys approved through categorical exclusions under NEPA.
Certainly, we’re seeing the administration in every single possible opportunity eliminate or shortcut public input and review, and the permitting bill certainly seems to be pointing further in that direction.
The whole rush for speed-to-power over the next few years makes the rest of the Trump administration, should the permitting reform bill become law, feel more important. How does that timing weigh on your organization as you approach the lame duck session? You’re calling for a moratorium on data centers on public lands as we approach a conversation about whether to make it easier to build on federal lands.
That’s why we’re calling for a moratorium eyes open. It’s an uphill push. But if you look at the backlash happening, a lot of it is because the public is concerned these are being pushed forward with very little transparency, or regardless of whether the public supports them, and often done through mechanisms that hide the scale and scope of their impacts. That’s one of the big motivators behind seeking a moratorium. Because this is proceeding so fast, it’s even more essential we pump the brakes and give the public a chance for input.
What do you want to see come after a moratorium? What are the appropriate safeguards? Or do you just not want to see these projects on Interior land?
There are fundamental questions we need answered, including whether the BLM has clear authority to permit and authorize these large projects on public lands. They haven’t answered sufficient questions about that. There’s also the question of the public’s view on this. We don’t want to pre-suppose what the future post moratorium will look like.
There’s just this huge, novel use case, and the public needs to weigh in. If they’re ever given a chance to actually say something, all the polling we’ve seen says the public doesn’t want these on public lands at all. And so, we hope this is also a conversation about what we want for our public lands generally.
Plus more of the week’s biggest development fights.
1. Central Michigan – I regret to inform you of this back-and-forth between candidates running for Congress and a would-be constituent because it’s a warning sign for the renewable energy sector (and sort of broke my brain).
2. Doña Ana County, New Mexico – I suggest you pay closer attention to the federal permitting fight playing out over Oracle’s Project Jupiter.
3. Phoenix, Arizona – Does anyone want to tell me what happened to the Lava Run wind and solar Project?
4. Nashville, Tennessee – Data center developer DC Blox is hitting a roadblock in Nashville. Let’s hope it doesn’t turn into a legal zoo.
The Senate’s compromise bill enters the chat at a moment when federal land and anti-pipeline advocates are already quite activated.
The AI data center backlash is getting louder in D.C. ahead of the midterms – and it’s poised to collide head-on with the new permitting reform deal being negotiated in Congress.
This week, major environmental advocacy organizations are taking large public steps to lean in on the data center fight. The League of Conservation Voters and Natural Resources Defense Council, I’ve been told, are imminently announcing a $250,000 ad buy in the Washington, D.C. market focused entirely on decrying fossil fuel-powered data centers and Trump administration policies to speed up their construction. The Wilderness Society, a prominent land conservation organization, announced it now supports a moratorium against data centers on “public lands” focused on the roughly half billion acres under the Interior Department’s stewardship. And Earthjustice on Thursday did a detailed report claiming that 80% of the data centers under development “bringing their own power” are going to rely on gas generation.
“We are trying to reach a D.C. audience and add to the conversation on data centers,” Sara Chieffo, LCV’s head of government affairs, told me of the ad buy. “We’re at a time when there have been no regulations passed at the federal level on Big Tech, or data centers, and we have communities from very many different backgrounds, across the political spectrum, really shouting for enforceable safeguards to be put in place for data center development. For their pocket book, for air and water, and for having a say in what their actual communities look like.”
In a vacuum, all of this action would feel normal – what environmental organization isn’t focused on data centers right now? And if this much fossil fuel is going to be burned in the name of computing, why wouldn’t these groups be focused so intently on the problem?
But there’s another wrinkle: It’s impossible to ignore the elephantesque permitting debate in the room, given any progress on a bill would undoubtedly help data centers with any kind of federal nexus, as well as some of the large fossil power infrastructure they’re demanding.
Last week, we all learned of the Bipartisan American Affordability and Jobs Act, or BAAJA, which would radically change federal permitting for essentially all large infrastructure projects with a federal nexus. The bill, negotiated by top Republicans and Democrats in the U.S. Senate, aims to expedite bureaucratic review processes for industrial projects with any presence on federal lands, water pollution risk covered under the Clean Water Act, and/or potential impacts to federally-protected species habitat and historic sites. Many of these changes, like significantly narrowing claims under the National Environmental Policy Act, could mean quicker permitting decisions from the federal government; other policies in the bill, like a truncated statute of limitations for lawsuits, could mean developers avoid significant and costly litigation risk as they apply for federal permits.
There’s a lot to potentially love in this bill for decarb hawks – transmission reforms and permitting certainty, among other things. But the bill is incredibly divisive, especially amongst those interested in seeing renewable energy boosted without undue compromise for fossil fuel development and preserving the existing legal framework for protecting the environment through litigation. So controversial is this bill that all of the organizations I’ve mentioned – LCV, Sierra Club, NRDC, Wilderness Society, Earthjustice – have so far eschewed explicit formal statements opposing the bill, instead expressing caution about air and water impacts while saying they need more time to review it and speak with lawmakers.
It’s clear though the environmentalist community wants people to think about data centers as debate on the bill approaches. Those who publicly oppose the bill at this moment say its enactment under the current administration would fully unlock federal acreage for the worst incarnation of an unfettered fossil-powered data center boom. “In any permutation, this bill is a good thing for data centers,” said Brett Hartl, director of government affairs for Center for Biological Diversity. After the bill was introduced, an organizing call between environmentalists leaked revealing discussions on how to stop it from gaining traction. One idea raised, per a transcript of the call published by Punchbowl News, was leaning heavily into talking about AI data center permitting.
I asked Chieffo if the LCV ad buy was related to the permitting debate in D.C. She told me it was in the works before senators introduced the bipartisan permitting deal last week. “This is a longstanding focus of ours, to make sure the buildout of data centers do not perpetuate dirty energy or exacerbate the climate crisis,” she told me. Then I asked, if this isn’t about the permitting bill, but it is about federal policy about approving data centers, then how do AI data centers play into the conversation around permitting reform? Do you see the AI data center conversation playing a role in the permitting reform debate?
“The way I would answer that is, well, there are equities and impacts that permitting reform has on the ability to build data centers in this country. And there’s a much larger conversation that should be happening – and isn’t yet happening – around fully holding data centers and Big Tech accountable for their environmental and consumer impacts, safety, and broader regulation. It’s a much bigger conversation than just permitting conversations,” Chieffo told me.
Then she added something else: “The provisions in conversation right now in the Senate do not cover the full suite of what we believe we need to see to hold data centers accountable and address the environmental impacts, let alone the other impacts folks are concerned about with jobs, safety and the rest.”
There’s absolutely a hypothetical risk that enacting such sweeping permitting legislation could enable a faster fossil-powered AI data center buildout, particularly in two ways: federal land development and easier pipeline permits.
We know that President Trump’s executive order encouraging data centers on federal land has led to interest in developing large projects on Interior Department acreage in Arizona, Idaho, Nevada, Oregon, and Utah. How many of these projects are serious is unclear, partially because the federal land permitting process is opaque, and also due to some permitting applications gleaning more early-stage speculation than a commitment (see: Clearway’s reversal on this project). At least some of this development would be powered by gas, as we’ve previously covered.
There’s also the pipelines. We’ve previously covered how the bill’s changes to the Clean Water Act would take away a provision under the law previously cited by Democratic governors to block pipeline expansions, while limiting state and tribe authority under the law to cite impacts other than direct water discharges when rejecting or blocking permits. In the name of project certainty, the bill would also enshrine protections against approval revocation for all kinds of energy facilities, including pipelines. Many of the pipelines under development today are capacity expansions and not explicitly for data centers, and many of them may be approved regardless of whether BAAJA becomes law. But it’s almost impossible to divorce new gas projects from the data center industry’s fortunes, given climbing demand.
Advocates for decarbonizing the U.S. economy who support the bill say the legislation offers a safer trade-off than critics suggest. They put forward that most data center development is not on federal lands, rendering much of the actual AI infrastructure outside the scope of the bill’s impacts. In addition, they argue there are potential upsides, like the bill’s provisions unlocking new transmission development, expediting interconnection queue processing, and making data center developers pay for new energy grid upgrades, all of which could be good for renewable energy development.
Grayson Flood, a senior fellow at Groundwork Collaborative, told me he believes the bill will actually incentivize more data center developers to hook up to the grid and may result in fewer projects relying on off-grid gas plants constructed purely for operating GPUs. Studies have shown building off-grid can be almost twice as expensive. By reducing barriers to connection, and encouraging new transmission that unlocks renewable energy, Flood said one can easily see a pathway to a cleaner data center sector in the future under the bill.
“At the end of the day, if you want these data centers to be powered by clean, firm capacity, anything from solar and storage to wind and storage to nuclear, geothermal, and hydropower, you’re going to need to have a grid that can bring those sources to the data centers, and right now we really don’t have that,” said Flood, who previously worked as legislative director for Rep. Alexandria Ocasio-Cortez. “At a macro level, we need the bulk power system built out to see the power we want to see, and this bill makes data centers pay more than any other piece of proposed federal legislation to make that happen.”
Where does this leave us? Over the next month, we’ll live through a midterms election cycle chock full of ads activating anti-data center sentiments on both sides of the aisle. Then, right afterwards, the energy sector will pivot its attention span back to Congress and fight to pass a permitting bill that will not primarily benefit data centers, but clearly has upsides its opponents will want to call attention to.
Editor’s note: This story has been updated to correct the organization collaborating on the ad buy with LCV.