Sign In or Create an Account.

By continuing, you agree to the Terms of Service and acknowledge our Privacy Policy

Guides

A Car Buyer’s Guide to the 2024 EV Tax Credit

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

President Biden.
Heatmap Illustration/Getty Images

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.

Who is affected by these new rules?

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.

Why are these new rules important?

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.

Why is this change happening now?

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.

Will more EVs or fewer EVs qualify for a subsidy under those new rules?

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.

Which EVs will qualify under the new rules in 2024?

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.

Are there any EVs that definitely do not qualify for either tax credit?

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.

Have there been any other recent changes to the EV tax credit? 

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.

Are there any income caps on the $7,500 tax credit?

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.

Lots of rules! Is there a price limit on the EVs that can qualify for this new subsidy?

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.

If my household makes more than that, do I have any other options?

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.

There’s no way I can afford a new EV. Does the IRA contain any subsidies for buying a used EV?

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.

Out of the curiosity, what models qualified for the $7,500 credit before April 18?

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.

Get the best of Heatmap delivered to your inbox:

* indicates required
  • Blue

    You’re out of free articles.

    Subscribe today to experience Heatmap’s expert analysis 
of climate change, clean energy, and sustainability.
    To continue reading
    Create a free account or sign in to unlock more free articles.
    or
    Please enter an email address
    By continuing, you agree to the Terms of Service and acknowledge our Privacy Policy
    Daily Briefing

    AI Is About to Get Boring

    We’re about to see what happens when big ideas become companies.

    AI apps.
    Heatmap Illustration/Getty Images

    Before I covered energy and climate change, I was a technology journalist. And I remember 2011, 2012, and 2013 as a time of tremendous change.

    Over the course of a few years, a procession of tech startups — including Facebook, Twitter, LinkedIn and Yelp — transitioned from being secretive industry darlings to normal publicly traded companies. All at once, social media companies that had once seemed cool and somewhat elusive turned into some of the biggest and most boring members of the Fortune 500. These companies didn’t become any less interesting to Wall Street, of course, and Facebook soon cemented itself as a profit titan. But the era when a social media startup could seem alluring, potent, and even darkly glamorous had concluded. With a shuffling of ownership papers, the avant garde became the old guard.

    Keep reading...Show less
    Yellow
    Climate

    The World Cup’s Hottest Disaster Plan

    Seattle practiced responding to a heat dome during the international soccer tournament. It didn’t go well.

    A soccer ball and Earth.
    Heatmap Illustration/Getty Images

    Welcome to Seattle! If you’re one of the 750,000 visitors in town to watch the 2026 North American FIFA World Cup, you’re going to love it here. For one thing, you’ve arrived just in time for the city to suspend its interminable construction for the games. That’s a plus! Be sure to check out our newly pedestrianized Pike Place Market and stroll along the waterfront to “Seattle Stadium” (or sound like a local and call it “Qwest”). You might even get a little chilly from the wind off the bay — you can thank our “temperate, oceanic climate” for that. It’s what makes Seattle the safest place in the United States to attend (or play in) a World Cup game, per researchers at Queen’s University Belfast — at least, from the perspective of extreme heat.

    That’s worth bragging about. Extreme heat has been a concern at almost every subsequent World Cup going back to the 2014 World Cup in Brazil, including the 2022 tournament in Qatar, which FIFA had to reschedule to the winter. The 2026 World Cup could get dicey, too. Of the 104 scheduled matches in 16 host cities in the U.S., Canada, and Mexico over the next month, at least half have a 50% chance or greater of being played in temperatures of 82 degrees Fahrenheit or higher, according to research by Climate Central — that being the threshold at which player performance begins to suffer, with athletes slowing down, getting sick, and making poorer decisions because of the heat. The odds of there being impairing heat during the World Cup final in New York on July 19 are basically a coin flip, and 17% higher than they otherwise would have been due to climate change-induced warming.

    Keep reading...Show less
    AM Briefing

    A Solar Bright Spot

    On grid investments, CANDUs, and green steel

    Qcells workers.
    Heatmap Illustration/Qcells

    Current conditions: Tropical Storm Cristina is inching north toward landfall in Central America, threatening floods, landslides, and winds of up to 73 miles per hour • Washington, D.C., is poised for rain for the rest of the week as temperatures rise to nearly 100 degrees Fahrenheit by Friday • By contrast, Cartersville, Georgia, where the solar manufacturer Qcells just started up its factory, is looking at a two-day break of sunshine from an otherwise gray and wet forecast.


    THE TOP FIVE

    1. America’s biggest solar factory is nearing full capacity

    At the start of 2023, South Korea’s biggest solar manufacturer, Qcells, began construction on a sweeping new factory northwest of Atlanta in Cartersville, Georgia. Betting that U.S. tariffs on Chinese solar panels were here to stay, the company gambled on bringing most of the supply chain under one roof. On Tuesday, Qcells started producing solar cells at the plant, marking what it called “a major milestone toward completing the country’s only vertically integrated solar manufacturing plant.” The firm expects to reach full production by the third quarter of this year. The factory’s module assembly line, meanwhile, is now at full capacity, building 16,700 panels per day. “Producing the first solar cells at Cartersville is a milestone for Qcells and for American manufacturing,” Andy Park, the global chief executive of Qcells, said in a statement. “As our ingot, wafer, and cell lines reach full capacity, we’ll be making the major components of a solar panel right here in Georgia.”

    Keep reading...Show less
    Blue