The Inflation Reduction Act (IRA) provides new opportunities for consumers to save money on clean vehicles, offering multiple incentives for the purchase or lease of electric vehicles (EVs), plug-in hybrid vehicles, fuel cell vehicles, and associated equipment such as chargers. These vehicles are more efficient than gas-powered vehicles, so you can save hundreds of dollars per year on fuel and significantly reduce pollution.
If you’ve been saving up to purchase a clean vehicle of your own, here’s what you should know.
Download the new clean vehicle tax credit checklist or used clean vehicle tax credit checklist.
Summary of Tax Credits for New and Used Clean Vehicles and Charging Equipment
Three new tax credits are available to individual purchasers of clean vehicles. To find out if your purchase will qualify, you’ll first need to decide whether you’re interested in a new or used vehicle. You’ll also need to know the vehicle model. Next, you can determine which of these credits applies to you:
- Up to $4,000 for buyers of qualified, previously owned clean vehicles. For this credit, see this list of qualified vehicles.
| Purchasing a Used Clean Vehicle - Requirements | |
|---|---|
| Taxpayer income and status | The taxpayer’s modified adjusted gross income for either the current year or prior year must be $150,000 or less for joint filers and surviving spouses, $112,500 or less for head of household filers, or $75,000 or less for other filers. Taxpayer must not be a dependent that is claimed on another taxpayer’s tax return. |
| Taxpayer eligibility | Taxpayer has not claimed this credit in the past three years. (2023 is the first year that this credit can be claimed.) |
| Vehicle type and age | The vehicle is an electric vehicle, plug-in hybrid electric vehicle, or fuel cell vehicle, and the model year is at least two years earlier than the calendar year of your purchase. See the current list of eligible models. |
| Vehicle sale price and dealer | Vehicle costs $25,000 or less and is sold by a dealer registered with the IRS. |
| Previous transfer status | Vehicle has not already been transferred after August 16, 2022, to a qualified buyer other than the person who was the original user of the vehicle. Check the sales history of the vehicle and to learn more about the eligibility rules for previously owned clean vehicles. |
- Up to $7,500 for buyers of qualified, new clean vehicles. For this credit, there are two lists of qualified vehicles: those purchased in 2023 or later, and those purchased in 2022 or earlier.
| Purchasing a New Clean Vehicle - Requirements | |
|---|---|
| Taxpayer income | The taxpayer’s modified adjusted gross income for either the current or prior year must be $300,000 or less for joint filers and surviving spouses, $225,000 or less for head of household filers, or $150,000 or less for other filers. |
| Vehicle type | The vehicle is an electric vehicle, plug-in hybrid electric vehicle, or fuel cell vehicle. |
| Vehicle Manufacturer’s Suggested Retail price including options | The MSRP of a pickup truck, van, or SUV is $80,000 or less; for all other passenger vehicles, $55,000 or less. See here for current list of eligible models and applicable MSRP caps and here for details about optional equipment. |
| Vehicle Assembly Location | Assembly occurred in North America. Confirm this by adding the make, model, and year of the vehicle here, and ask your dealer for the Vehicle Identification Number (VIN) of the specific vehicle you have in mind and enter it here. |
If you checked ALL of the above, you may qualify for a full credit of $7,500 or a partial credit of $3,750, based on the vehicle’s battery components and critical minerals. Visit IRS.gov for more details and check a vehicle's eligibility at FuelEconomy.gov.
- Up to $1,000 toward the cost for each home EV charging port and its essential components or parts and up to $1,000 for energy storage used for home EV charging. See more detail at the U.S. Department of Treasury.
| Purchasing a Recharging Property or Associated Energy Storage Property - Requirements | |
|---|---|
| Taxpayer location | Find out if your home is in an eligible low-income or non-urban census tract. |
| Installation location | The charging port, components, parts and/or associated energy storage must be installed at the same or immediately adjacent physical address of the point where the electric vehicle is recharged. |
| Vehicle types | Property must be used to recharge an electric vehicle or plug-in hybrid electric vehicle, including two- and three-wheeled vehicles |
| Bidirectional chargers | Recharging property also include equipment capable of discharging electricity from the battery of an EV to an external electric load |
In figuring out your eligibility for a clean vehicle tax credit, there are three more factors to consider: the timing of your vehicle acquisition, your personal or household income level, and whether the vehicle itself is eligible.
How People Qualify for the Clean Vehicle Tax Credit
Income Restrictions
- For new clean vehicle purchases in 2023 and beyond, your modified adjusted gross income (MAGI, see here for details) for either the current year or prior year must be:
- $300,000 or less, if you file taxes jointly with your spouse or are a surviving spouse
- $225,000 or less, if you file taxes as the head of a household
- $150,000 or less, for other filers
- For used clean vehicle purchases, your modified adjusted gross income for either the current year or prior year must be:
- $150,000 or less, if you file taxes jointly with your spouse or are a surviving spouse
- $112,500 or less, if you file taxes as the head of a household
- $75,000 or less, for other filers
Timing Restrictions
- If you bought a new, qualified clean vehicle in 2022 or before, you may still be eligible for a clean vehicle tax credit—but some restrictions apply. For a full summary of those restrictions, review this IRS guide. If you are buying a new clean vehicle January 1, 2023, or later, review this IRS guide. For both new and used clean vehicles, you must purchase before December 31, 2032, at which point the IRA's clean-vehicle tax credits will expire.
How Vehicles Qualify for the Clean Vehicle Tax Credits
It's important to keep in mind that not all clean vehicles are eligible for IRA tax credits. IRA contains various criteria that vehicles must meet to qualify for the clean vehicle tax credit, including where the vehicle was assembled; the size of the vehicle battery; the location of the extraction, processing, recycling, manufacturing, and assembly of the battery's minerals and/or component parts; the manufacturer suggested retail price or MSRP; and other requirements. See the links below for more information about vehicle models from qualified manufacturers:
- Manufacturers and Models for New Qualified Clean Vehicles Purchased in 2023 or After
- Manufacturers and Models of Qualified Used Clean Vehicles
Visit the FuelEconomy.gov Tax Center to determine whether a vehicle qualifies for a tax credit, navigate eligibility requirements, and read frequently asked questions. You can also use the tax credit calculator to determine how much you can claim on a used vehicle.
Download and print out our buyer eligibility checklist or click on the file above and bring it with you to the dealership.
The IRS maintains and updates a list of new vehicles that qualify for tax credits of up to $7,500. As new rules take effect and manufacturers adapt to changing conditions in the clean vehicle market, it is likely that the list of eligible vehicles will change. So, as you make plans to purchase a clean vehicle, please remember to check the FuelEconomy.gov Tax Center regularly.
How People Qualify for the Qualified Alternative Fuel Vehicle Refueling Property Credit
Eligible Locations
EV chargers must be installed in low-income or non-urban census tracts, which can be found here. IRS will periodically publish lists of census tracts that meet the requirements.
Credit Amount
The credit for each single item of property is 30% of the total cost—up to $1,000 for personal-use chargers.
Eligible Items
Each charging port and each storage property used in recharging an EV is considered a single item of property for calculating the credit. For example, if you install a single charging port that required upgrading your home’s electrical panel, conduit, and wiring, the 30% credit is applied to the sum of the cost of each property (i.e. one charging port), and the costs of components and parts that are essential to the operation of the property (i.e. electrical panel, conduit, and wiring)—including labor costs for construction and installation. See additional examples for more detail.
How to Claim the New Clean Vehicle Tax Credit
Starting on Jan. 1, 2024, eligible consumers will have the option to transfer the value of the tax credit to dealers that meet certain requirements in exchange for an equivalent reduction in the vehicle’s purchase price. That would mean an immediate reduction off the price of the vehicle at the point of sale rather than waiting for a tax credit after filing taxes.
Dealers will be responsible for submitting the tax credit information to the IRS to determine vehicle eligibility and credit amount. Dealers must also provide buyers a copy of the IRS's approval of the dealer's submission.
For up-to-date information for dealers and consumers on point-of-sale credits, refer to information on the IRS Clean Vehicle Tax Credit.
To find additional up-to-date information about eligibility, the IRS maintains a list. Happy shopping!
Disclaimer: The information on this page should not be viewed as an official or legally binding document. Other requirements or exceptions may apply. For more detailed information, please consult an IRS tax representative and/or official IRS publications.
Subscribe to receive updates from Energy Saver, including new blogs, updated content, and seasonal energy saving tips for consumers and homeowners.
