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The electric vehicle tax credit, now known as the clean vehicle credit, has been expanded and updated with new rules. From income limits to vehicle requirements, knowing the details ensures you can confidently claim the credit. Get updated on the latest qualifications so you can take advantage of this tax credit if you have an eligible car.
The One Big Beautiful Bill that passed includes permanently extending tax cuts from the Tax Cuts and Jobs Act, including increasing the cap on the amount of state and local or sales tax and property tax (SALT) that you can deduct, makes cuts to energy credits passed under the Inflation Reduction Act, makes changes to taxes on tips and overtime for certain workers, reforms Medicaid, increases the Debt ceiling, and reforms Pell Grants and student loans. Updates to this article are in process. Check our One Big Beautiful Bill article for more information.
The One Big Beautiful Bill passed in July of 2025 ended the federal EV credit for any vehicles purchased after September 30, 2025. The content below provides information for purchases of vehicles before this October 2025.
The trajectory of climate change was in the crosshairs of the Inflation Reduction Act of 2022, with the US government aiming to lessen the impact seen on the environment. One major culprit of greenhouse gas emissions comes from the transportation sector, gasoline-powered automobile transportation in particular. As a way to lure taxpayers away from internal combustion gas vehicles, the tax code offered a generous incentive to car buyers interested in purchasing an electric vehicle for the first time. The previous credit had a limit on the number of electric vehicles a vehicle manufacturer could sell and was worth $7,500. The rules have changed, and we’ve got what you need to know about the new clean vehicle tax credit.
The electric vehicle tax credit, also known as the EV tax credit, is a nonrefundable credit meant to lower the cost of qualifying plug-in electric or other “clean” vehicles. The credit is worth between $2,500 and $7,500 for the 2022 tax year and eligibility for claiming the credit depends on the number of electric vehicles sold by the manufacturer, the vehicle’s weight, and if you own the car. The only change made to the credit for tax year 2022 is a new North American final assembly requirement, effective August 17, 2022.
The newly modified credit, now called the clean vehicle credit, has new rules for claiming the credit based on assembly location, income thresholds, and expanded eligibility for the vehicles covered by the credit. These new rules largely take effect in 2023 and last until September 30, 2025.
Beginning with tax year 2023, in addition to a new North America final assembly requirement, the former $7,500 credit is broken into two new credits worth up to $3,750 each for qualifying buyers of new all-electric cars, fuel cell vehicles and hybrid plug-ins. One of the new $3,750 credits is available for meeting the critical minerals requirement and the other for purchasing a qualifying vehicle that meets the battery component requirement.
The credit ends September 30, 2025.
The clean vehicle tax credit has a number of stipulations you’ll need to meet to qualify for claiming the two-part credit on a fully electric or plug-in-hybrid electric vehicle placed in service after April 17, 2023.
To be considered a qualified clean vehicle, it needs to meet these criteria:
To claim the tax credit, you’ll need to meet the following requirements:
The Inflation Reduction Act significantly altered, extended, and renamed the EV tax credit. Depending on when you buy an EV or clean vehicle, you may encounter different rules for claiming the credit.
Prior to the changes brought from the Inflation Reduction Act, the EV tax credit was worth $7,500 and could be claimed on cars that met certain battery capacity requirements and was phased out once a manufacturer sold 200,000 EVs.
After passage of the Inflation Reduction Act, any clean vehicle that was purchased from August 17, 2022, to December 31, 2022, needed to have their final assembly completed in North America to meet eligibility requirements.
The US Department of Energy has compiled a list of vehicles that likely qualified through December 31, 2022.
If you entered into a binding written contract to purchase an EV before August 17 that qualified for the previous EV tax credit rules and expect the car to be delivered at a later date, you’re generally still eligible to claim the credit without needing to meet the additional final North American assembly requirement.
Below, we cover the new rules and requirements for claiming the clean vehicle tax credit.
The value of the new clean vehicle tax credit has been extended through September 30, 2025.
The clean vehicle tax credit now applies income limitations for eligibility based on your filing status and the lesser of your modified adjusted gross income (MAGI) for the year that the new clean vehicle was placed in service or for the preceding year:
The clean vehicle tax credit has price limitations tied to the Manufacturer’s Suggested Retail Price (MSRP) on new EVs as follows: vans, SUVs, and pickup trucks can’t exceed $80,000 while sedans and other vehicle types can’t exceed $55,000.
Another new requirement for claiming the credit comes from needing to have the final assembly occur within North America. If you’d like to check your car’s final assembly details, you can reference the National Highway Traffic Safety Administration’s VIN database. (Note: This is also a condition for EVs purchased between August 17, 2022, and December 31, 2022.)
The new clean vehicle tax credit is made up of two requirements that total to $7,500 ($3,750 each). The two requirements are as follows:
(Note: Rules around new battery and sourcing requirements are not yet finalized and await further guidance from the Treasury Department. Until guidance is issued and implemented, this requirement won’t be enforced when determining eligibility for claiming the clean vehicle tax credit.)
To maintain further preference for domestic manufacturing, assembly, extraction and processing, the credit also disallows sourcing battery parts from a foreign entity of concern starting in 2024. Further, clean vehicles can’t contain critical minerals sources from foreign entities of concern starting in 2025.
Beginning in 2024, you can claim the credit by transferring it to a dealer at the point-of-sale. By doing this, it directly reduces the qualifying vehicle’s purchase price. You won’t need to wait until you file your tax return to claim your credit, instead realizing a lower purchase price at the dealer. You will still pay any applicable sales taxes and licensing fees at the full non-credit-adjusted purchase price. Meaning, for example, if you bought a qualifying car for $35,000 but had the price lowered to $27,500 by claiming the credit at your dealer, your sales tax and licensing fees would relate to the $35,000 purchase price and not the $27,500 net amount you’d pay after claiming the credit.
One item worth noting here relates to the recapture of that transferred credit. You can’t circumvent the income limitations of the credit by transferring the credit at the point-of-sale, as it could result in paying back the credit. This credit, if transferred to the dealer, when you earn too much income to claim it yourself, would be recaptured and would require you to repay your tax liability accordingly. However, if you do not have sufficient tax liability to fully use the credit if it was included on your tax return, you are not obligated to pay it back. This can effectively make the credit partially or fully refundable for certain taxpayers.
Used cars have become eligible for the new tax credits, under the used clean vehicle credit. While this is a lesser amount than the $7,500 credit available for new qualified vehicles, it’s still a new credit that can make purchasing previously-owned clean vehicles more affordable for consumers. The new tax credit for pre-owned clean vehicles lasts for tax years 2023 through September 30, 2025. Qualified buyers can get a credit equal to the lesser of $4,000 or 30% of the sales price.
Other stipulations apply:
Additionally, similar to the MAGI limitations on new vehicles based on the lesser of your MAGI for the year that the used clean vehicle was placed in service or for the preceding year as follows for your filing status:
These are new rules for claiming the federal clean vehicle tax credit, but they don’t necessarily cover any state or local-incentives offered by your government, utility, or other programs. In some cases, you may have the opportunity to claim additional incentives to drive down the cost of clean vehicle ownership further through local programs, discounts, and tax incentives. Make sure you review all available information related to your location to see if you might qualify for other tax measures and price incentives.
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The above article is intended to provide generalized financial information designed to educate a broad segment of the public; it does not give personalized tax, investment, legal, or other business and professional advice. Before taking any action, you should always seek the assistance of a professional who knows your particular situation for advice on taxes, your investments, the law, or any other business and professional matters that affect you and/or your business.
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