Which Electric Vehicles are Eligible for Tax Credit in US? | 2023 List

With the Inflation Reduction Act, the 200,000 sales cap on tax credit is gone, and EVs from Tesla and General Motors are once again eligible for the tax credit.

Bilal Akgunduz

January 26, 2023 5:14 PM
Last Update: February 19, 2023 10:54 PM

The new clean vehicle tax credit, which came into effect in January 2023, is bringing down the cost of owning an electric vehicle. Before the IRA (Inflation Reduction Act), popular brands like Tesla and General Motors were not eligible because of the sales limit. Thanks to new legislation, some of the best EVs, such as the Tesla Model Y and Chevrolet Bolt now qualify for the tax credit. But electric vehicles assembled outside the US are now disqualified.

Normally, when an EV manufacturer sells 200,000 vehicles in the United States, the $7,500 federal tax credit halves to $3,750, and that process repeats a few times before being reduced to no credit. Tesla and General Motors already sold more than enough eligible EVs. So, there is no tax credit for these brands, right? Not quite. Let us explain.

With the Inflation Reduction Act, the 200,000 sales cap on tax credit is gone, and EVs from Tesla and General Motors are once again eligible for the tax credit. But there are now price caps for different kinds of vehicles. We try to sum up some of the new details of tax credit eligibility and created a list of vehicles eligible for the tax credit in the United States.

Update 2 (18th Feb, 2023): Genesis Electrified GV70 became the first Hyundai Group EV to earn tax credit eligibility. The luxury SUV is being produced at Korean carmaker’s Alabama plant.

Update 1: All Tesla Model Y variants, Ford Mustang Mach-E, VW ID.4, and Cadillac Lyriq are now eligible under the SUV MSRP cap $80,000, according to latest regulatory changes made by IRS on February 3rd, 2023.

List of Electric Vehicles That Qualify for New Clean Vehicle Tax Credit

Qualified Vehicles MSRP Limit Retail Price Range
Genesis Electrified GV70 $80,000 $65,850 – $73,225
Ford F-150 Lightning $80,000 $55,974 – $96,874
Ford Mustang Mach-E $80,000 $46,895 – $69,895
Ford E-Transit $80,000 $49,575 – $53,790
Chevrolet Bolt $55,000 $27,495 – $30,695
Chevrolet Bolt EUV $55,000 $28,795 – $33,790
Cadillac Lyriq $80,000 $62,990
Rivian R1S $80,000 $78,000 – $92,000
Rivian R1T $80,000 $73,000 – $89,000
Tesla Model 3 RWD $55,000 $43,990
Tesla Model 3 Performance $55,000 $53,990
Tesla Model Y AWD Long Range $80,000 $53,490
Tesla Model Y Performance $80,000 $56,990
Volkswagen ID.4 (inc. Pro, Pro S, S variants) $80,000 $38,995 – $51,445
Volkswagen ID.4 AWD (inc. Pro, Pro S variants) $80,000 $47,795 – $55,245
Nissan Leaf S $55,000 $28,040
Nissan Leaf SV Plus $55,000 $36,040

According to Consumer Reports, new tax credit rules will go into place in March 2023. This new bill will limit the credit value based on the vehicle’s battery origin, the origin of the battery materials, etc. And starting in 2024, the tax credit eligibility will be lost, if any materials of the battery are from “foreign entities of concern”, such as China and Russia. EV manufacturers are notifiying customers to finalize their order before the new rules take effect.

Do Leased Electric Vehicles Qualify for Tax Credit?

The EV tax credit requirements will get stricter each year through 2026. By the time all rules go into effect, a large portion of electric vehicles will lose their eligibility. But there is an alternative to purchasing an EV to benefit from clean vehicle incentives.

If an electric vehicle is leased, most of the requirements for purchasing a vehicle may not apply. For instance, you could lease an EV made outside the US and still get a tax credit. The credit will be received by the dealer, not the person leasing the vehicle, but it is up to your leaser to pass the saving on to your payments.

Thanks to new rules, expensive electric vehicles like Lucid Air, and Tesla Model S may also benefit from tax credit if a customer chooses to lease instead of purchase.


What do you think?


All Comments


Most Read