Recent adjustments to the U.S. electric vehicle (EV) tax credit have come into effect, reshaping the landscape for qualifying options in 2024. Tesla and several other automakers find some of their vehicles excluded under the updated guidelines, with only a limited selection meeting the criteria.
While the list of qualifying EVs has shortened, the 2024 guidance introduces a significant change by allowing sellers to offer the rebate at the point of sale. This departure from the previous model, where buyers had to wait until filing their taxes, has been embraced by selected dealerships and companies with a direct sales approach, including Tesla and Rivian.
The Internal Revenue Service (IRS) extends a $7,500 tax credit to certain EVs, encompassing both battery-electric vehicles (BEVs) and plug-in hybrid electric vehicles (PHEVs), with a reduced credit of $3,750. Notably, one PHEV retains eligibility for the full tax credit, while others qualify for the reduced credit. Among BEVs, only five models remain eligible for the full $7,500 credit, including multiple configurations.
The tax credit also imposes maximum Manufacturer’s Suggested Retail Price (MSRP) limits, capping at $80,000 for vans, SUVs, and pickups, and at $55,000 for other EVs. Additionally, buyers must meet income thresholds, with a modified adjusted gross income (AGI) limit of $300,000 for married couples filing jointly, $225,000 for heads of households, or $150,000 for other filers.
Below is a snapshot of BEVs and PHEVs that qualify for the federal tax credit:
BEVs Eligible for the $7,500 Tax Credit:
- Chevy Bolt EUV
- Chevy Bolt EV
- Ford F-150 Lightning Standard Range
- Ford F-150 Lightning Extended Range
- Tesla Model 3 Performance
- Tesla Model Y Rear Wheel Drive
- Tesla Model Y All Wheel Drive
- Tesla Model Y Performance
- Tesla Model X Long Range
BEVs Eligible for the $3,750 Tax Credit:
- Rivian R1S Dual-Motor Large
- Rivian R1S Quad-Motor Large
- Rivian R1T Dual-Motor Large
- Rivian R1T Dual-Motor Max
- Rivian R1T Quad-Motor Large
PHEVs Eligible for the $7,500 Tax Credit:
- Chrysler Pacifica PHEV
PHEVs Eligible for the $3,750 Tax Credit:
- Ford Escape PHEV
- Jeep Grand Cherokee PHEV 4xe
- Jeep Wrangler PHEV 4xe
- Lincoln Corsair Grand Touring PHEV
The IRS webpage provides comprehensive details on the new requirements, including a fact sheet with frequently asked questions addressing the updated guidance.
