EV: Check tax credit eligibility
- POOJA SRIVASTAVA
- Nov 7, 2023
- 2 min read
The new credit, worth up to $7,500, is made up of two requirements, each adding up to half of the credit.
Technical Requirement:
Battery requirement:
To be eligible for the battery portion of the credit (up to $3,750), a certain percentage of the vehicle’s battery must be assembled or manufactured within North America.
The percentage thresholds will be as follows:
2023: 50%
2024: 60%
2025: 60%
2026: 70%
2027: 80%
2028: 90%
2029 through 2032: 100%
Critical minerals requirement: To receive the remaining $3,750 portion of the credit.
This requirement stipulates that a certain percentage of critical minerals in the car's battery must be extracted or processed within the U.S. or within a country with whom the U.S. has a free-trade agreement. The percentage thresholds will be as follows:
2023: 40%
2024: 50%
2025: 60%
2026: 70%
2027 through 2032: 80%
Beginning in 2024, vehicles may also not source battery parts from a foreign country of concern (e.g., China). And starting in 2025, EVs cannot contain any critical minerals sourced from a foreign country of concern.
Additional Income Threshold:
Additionally, a taxpayer’s eligibility for the tax credit may be limited by thresholds for modified adjusted gross income (MAGI); only individuals having a MAGI below the following thresholds are eligible for the tax credit:
$300,000 for joint filers
$225,000 for head-of-household filers
$150,000 for single filers
Important facts:
The credit is worth $2,500 to $7,500, depending on the car’s battery capacity.
Credits are reduced and eventually phase out after a manufacturer sells 200,000 qualifying vehicles. This makes EVs from Tesla and GM ineligible.
You must own the car. Used or leased cars don’t qualify.
The car must weigh less than 14,000 pounds.
The credit is nonrefundable; it can lower your tax bill to zero, but it won’t result in a refund.
Links to help you plan your next vehicle purchase:
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