The EV Tax Credit Is Changing in 2024: Here Are 10 Cars That Still Qualify
Written by
J. Arky
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Elizabeth Constantineau
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There is good news and bad news on the horizon if you are thinking of purchasing an electric vehicle (EV). The good news is that the EV tax break is getting more accessible, meaning that drivers could be seeing more green in their pockets while making the world around them more green.
The bad news is that fewer EVs will be eligible for the tax credit starting in 2024, according to new standards set forth by the IRS.
NPR reports that the new way to claim your credit will work as such: “First, after confirming the sale is eligible for the tax credit, the dealer basically fronts you the money. If you’re eligible for $7,500, the dealer credits you for that money as though you’d brought it in as cash. Then the dealer submits documentation to the IRS, and the IRS pays back the dealer that $7,500 — effectively meaning the tax credit is being handled through the dealership.”
Wayne Bechtol, a senior tax accountant and board advisor at Fiona, said of the EV tax credit changes: “While it has made the tax break more accessible, it has reduced the number of eligible cars. Thus, the customer choice becomes limited.”
Bechtol said it all boils down to two key factors: accessibility and eligibility.
“You can claim the tax credit at the point of sale, whereby you benefit from the tax credit immediately when purchasing the car instead of waiting until you file your tax returns,” Bechtol said. “The new tax rules have drastically reduced the number of eligible models. It used to be 43 models but has now been reduced to 19 because of the restrictions on battery components sourced from China.”
There are income caps to keep on your radar when purchasing an EV, particularly when it comes to new models. This is determined based on your adjusted gross income (AGI) and your taxable income, which amounts to your AGI calculated with itemized or standard deductions factored into the equation.
The income caps for new vehicles are $300,000 for married couples who file together, $225,000 for heads of households and $150,000 for other filers. The good news is that you can choose to take the credit in the form of a rebate. That means, regardless of your tax liability or how much you might owe, you still get the full credit. More than worth it in the long run.
So, as you are starting to prepare to shop around for an EV, keep tax season in mind and check out some of the cars that still qualify for the EV tax credit in 2024, according to Bechtol and others.
Chevrolet Bolt EV
- Model Years: 2022-23
- Estimated MSRP: $55,000
- Tax Credit: $7,500
Chevrolet Bolt EUV
- Model Years: 2022-23
- Estimated MSRP: $55,000
- Tax Credit: $7,500
Tesla Model 3 Performance
- Model Years: 2023-24
- Estimated MSRP: $55,000
- Tax Credit: $7,500
Tesla Model Y All-Wheel Drive
- Model Years: 2023-24
- Estimated MSRP: $80,000
- Tax Credit: $7,500
Chrysler Pacifica PHEV
- Model Years: 2022-24
- Estimated MSRP: $80,000
- Tax Credit: $7,500
Ford F-150 Lightning (Extended Range Battery)
- Model Years: 2022-24
- Estimated MSRP: $80,000
- Tax Credit: $7,500
Ford F-150 Lightning (Standard Range Battery)
- Model Years: 2022-24
- Estimated MSRP: $80,000
- Tax Credit: $7,500
Jeep Grand Cherokee PHEV 4xe
- Model Years: 2022-24
- Estimated MSRP: $80,000
- Tax Credit: $3,750
Jeep Wrangler PHEV 4xe
- Model Years: 2022-23
- Estimated MSRP: $80,000
- Tax Credit: $3,750
Rivian R1T Dual Large
- Model Years: 2023-24
- Estimated MSRP: $80,000
- Tax Credit: $3,750
One additional insider tip to keep in mind during your browsing: Don’t be so quick to rule out used electric vehicles. For the 2024 tax year, the IRS says a model of EV that’s from 2022 or earlier still qualifies for a tax credit of up to 30% of the sales price, up to a maximum of $4,000. Not only that, but vehicles have a price cap to be considered. If you are buying a used EV, be sure it costs less than $25,000 in order to see benefits in your tax return.
The capping does not stop there. It is also important to be aware that there is a much lower income cap when it comes to this particular tax credit: $75,000 for a single individual filing and $150,000 for an entire household. The final number will always be determined by adjusted gross income, so even if your salary alone might surpass those limits, you still could qualify for a tax credit. Just ask your accountant or CPA when it comes time to file.
