EV Tax Credits & Incentives (2024 Update)

As electric vehicles (EVs) become more mainstream, governments worldwide continue to offer financial incentives to encourage adoption. In the U.S., federal, state, and local EV tax credits and rebates can significantly reduce the cost of purchasing an electric car. However, the rules have changed in 2024, with new eligibility requirements and updated credit amounts.

This article breaks down the latest EV tax credits and incentives available in 2024, helping consumers make informed decisions when buying an electric vehicle.

Federal EV Tax Credit Updates for 2024

The Inflation Reduction Act (IRA) of 2022 overhauled the federal EV tax credit system, introducing new rules for vehicle and buyer eligibility. Here’s what’s changed in 2024:

1. Clean Vehicle Credit (IRC 30D)

• Credit Amount: Up to $7,500 for new EVs, split into two parts:

  • $3,750 for meeting critical mineral sourcing requirements (battery components).

  • $3,750 for meeting battery manufacturing and assembly requirements.

• Income Limits:

  • $150,000 for single filers.

  • $225,000 for heads of household.

  • $300,000 for married couples filing jointly.

• MSRP Caps:

  • $55,000 for sedans.

  • $80,000 for SUVs, trucks, and vans.

2. Used EV Tax Credit (IRC 25E)

• Credit Amount: Up to $4,000 (or 30% of sale price, whichever is lower).

• Vehicle Requirements: Must be at least two years old, purchased for under $25,000, and from a licensed dealer.

• Income Limits:

  • $75,000 for single filers.

  • $112,500 for heads of household.

  • $150,000 for married couples filing jointly.

3. Point-of-Sale Rebates (Starting 2024)

Previously, buyers had to wait until tax season to claim credits. Now, dealers can apply the credit at purchase, reducing the upfront cost.

4. Battery & Sourcing Requirements

Stricter rules now apply:

• A percentage of battery minerals must be sourced from the U.S. or free-trade partners.

• Battery components must be manufactured or assembled in North America.

• Some vehicles that previously qualified may no longer be eligible.

  State & Local EV Incentives

  In addition to federal credits, many states offer additional incentives:

  1. State Tax Credits & Rebates

• California: Up to $7,500 in rebates for low-income buyers.

• Colorado: $5,000 tax credit for new EVs.

• New York: $2,000 rebate for new EVs.

• Texas: $2,500 rebate for certain EVs.

2. Utility & Local Incentives

• Many power companies offer discounted charging rates or rebates for home charger installations.

• Cities like Los Angeles, Atlanta, and Denver provide additional perks, such as HOV lane access and free parking.

  How to Claim EV Tax Credits in 2024

• Check Eligibility: Use the IRS website or FuelEconomy.gov to confirm if your vehicle qualifies.

• Dealer Certification: Ensure the dealer reports the sale to the IRS.

• File IRS Form 8936 (for new EVs) or Form 8936 & 25E (for used EVs) with your tax return.

• Point-of-Sale Option: If the dealer offers an instant rebate, no further action is needed.

  Final Thoughts

  EV tax credits and incentives in 2024 remain strong but come with stricter rules. Buyers should verify eligibility before purchasing and take advantage of both federal and state programs to maximize savings.

  For the latest updates, visit the U.S. Department of Energy or IRS EV Credit pages.

  Would you like help finding eligible EVs in your area? Let us know in the comments!