IRS expands eligibility for electric vehicle tax credits

Posted: Feb 6, 2023 / 09:14 PM EST

Updated: Feb 6, 2023 / 09:14 PM EST

ROCHESTER, N.Y. (WROC) — The IRS has announced clarifications over what brand-new and used electric vehicles qualify for tax credits upon purchase. This is all part of the Clean Vehicle Tax Credit which gives drivers up to $7,500 after they buy certain EVs.

Beforehand, the Federal Government was labeling certain electric cars as different makes and models than their companies were which affected their eligibility and confused customers. On top of the vehicle exceeding the maximum manufacturing costs allowed for the tax credit.

Those rules have since been broadened now to expand eligibility for some popular electric vehicles. Including Teslas Model Y, initially labeled a sedan by the government, not an SUV. GM also missed its electric Cadillac qualifying for the tax credit because its retail price was $62,000.

Exceeding the maximum retail price of $55,000. But now the IRS created another category for electric vehicles from GM, Volkswagen, Rivian, Ford, Jeep, BMW, and others that qualify for the tax credit if they sell for less than $80,000.

Drivers buying brand-new electric vehicles will get $7500 after filing taxes with their purchase. While those who buy used electric vehicles older than 2021 can get up to $4,000 back in tax credits. But all deals must be done at a licensed car dealership.

“The biggest change that we’re seeing is being applied to leases,” Ide Volkswagen Sales Manager Joe Preteroti said. “This particular rebate will lower somebodies’ rebate anywhere from $180-$200 with the rebate. So, it’s made a big strong difference getting people back in because everything is payment driven.”

Couples who co-sign to buy a brand-new electric vehicle together must have an annual income under $300,000 to qualify for the tax credit. Or less than $150,000 individually. While those buying used EVs cannot exceed 150,000 in household income or $75,000 individually.

We have a full list of all the makes and models from each company that qualifies for the tax credit below.

EVs that qualify with an MRSP of $55,000 or less