Who qualifies for the $7,500 electric vehicle tax credit as changes come in 2024

Getting a tax credit for buying a new electric vehicle from incentives under the Biden administration will be easier starting Monday, but fewer vehicles will qualify.

New proposals the Department of the Treasury announced in October allow buyers of new clean vehicles to transfer federal tax credits to use at the dealership, rather than waiting to file an annual tax return during tax season.

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Starting in 2024, purchasers of new electric vehicles can get up to $7,500 off the sticker price if they make under $150,000, or $225,000 for heads of households and $300,000 for married couples. Buyers of used electric vehicles can get $4,000 off a car priced below $25,000 if they make under $75,000, or $112,500 for heads of households and $150,000 for married couples.

The Inflation Reduction Act, signed into law in 2022 by President Joe Biden, included major tax credits and climate measures to push clean energy.

However, updated guidance released in April shows most electric or plug-in hybrid vehicles will not get any tax credits. Electric vehicles must be assembled in North America and meet certain battery and weight requirements.

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The Treasury released sourcing updates for battery components and mineral contents that must meet certain requirements and price caps to qualify for the tax credits — those with vehicle battery parts that come from a “foreign entity of concern” are not eligible. After 2024, no electric vehicles can include critical minerals that have been extracted, processed, or recycled by an FEOC.

Despite these limitations, over a dozen models still qualify for the new vehicle credit, such as the Tesla Model 3, Tesla Model Y, Ford F-150 Lightning, Chrysler Pacifica plug-in hybrid, and others, though certain models may only qualify for a partial credit.