The $7,500 federal tax credit for electric vehicles used to be one of the most significant incentives for buying an EV. It allows you to get a rebate of up to $7,500 depending on the vehicle you choose and your income level.
However, there’s been some debate about whether this incentive will remain the same in 2023. There has already been a massive cut down on the list of cars that qualify. This means that the number of new EVs eligible for the full $7,500 tax refund is currently only 12 models.
Fortunately, I’ve done thorough research on what EVs still qualify so that you can decide which one meets your needs.
Why Are There Fewer Cars On The List Than Before?
The reason there are fewer EVs on the list is that vehicles now need to be manufactured in North America to qualify. This means car companies with factories in China, Germany, and other countries outside North America no longer qualify for this tax credit.
Since the new law passed, we’ve seen the removal of many manufacturers like Toyota and some German automakers.
However, to regain eligibility, some manufacturers are expanding their production facilities inside the US and Canada. As companies update their manufacturing to meet the latest requirements, their vehicles will return to the list of qualifying EVs.
The IRS frequently updates the list as manufacturers modify their models and release new ones. So an EV may lose and regain eligibility over time as production locations and parts sourcing changes.
2023 Update On Eligibility Rules
On April 17, 2023, new regulations went into effect requiring EVs to source specific percentages of battery minerals and components from North America or a US trade partner country. These updated rules aim to promote domestic manufacturing.
On April 18th, the IRS published an updated eligibility list reflecting the latest battery guidelines. While popular models like the Tesla Model Y and Chevy Bolt remain fully eligible for the $7,500 credit, several models now only qualify for a $3,750 credit. Others, including the VW ID.4, Nissan Leaf, and Rivians no longer qualify at all.
So this list that used to contain more vehicle makes and models now has fewer options. Let’s look at what’s still available.
Which EVs Still Qualify For The Full $7,500 Tax Credit?
As of April 2023, twelve EVs still fully qualify for the maximum $7,500 tax credit. Let‘s take a closer look at each one:
1. Cadillac Lyriq
The Cadillac Lyriq is an electric SUV with an EPA-rated range of 312 miles on a full charge, making it great for long road trips. With a starting price of $62,990, you can claim the maximum $7,500 tax credit if you meet the income requirements.
It offers responsive handling and rapid acceleration thanks to the 340 hp motor and rear-wheel drive. The Lyriq’s technology focuses on connectivity and comfort with its 33-inch LED display and remote self-parking feature.
2. Chevrolet Bolt EV
The Chevy Bolt EV is an affordable all-electric hatchback with an EPA range estimate of 259 miles. Priced at just $26,595, it offers EV range and performance comparable to far more expensive rivals.
Its 200 hp electric motor shoots the Bolt EV from 0-60 mph in 6.5 seconds. Plus, it includes dual charging cables for Level 1 and Level 2 EVSE stations. Chevrolet also provides a free Level 2 home charging station with every purchase.
3. Chevrolet Bolt EUV
The Bolt EUV is an enhanced Chevrolet electric vehicle designed for families. With 238 miles of range and ample rear legroom and cargo space, it competes directly with the pricier Tesla Model 3 while costing around $10,000 less.
Hitting 60 mph in 6.9 seconds, the Bolt EUV matches its EV sibling in acceleration. But its longer wheelbase provides extra interior room and comfort for passengers and their gear.
4. Ford F-150 Lightning
The F-150 Lightning brings Ford‘s iconic truck into the electric era in high-performance fashion. This electric pickup offers up to 320 miles of range and delivers a thrilling 111 mph top speed.
With up to 580 hp and 775 lb-ft of torque from its dual motors, few can match the Lightning‘s 3.5-second 0-60 mph sprint. Yet it starts at an attainable $41,769 before any tax credits. Add in free charging for the first two years, and it‘s easy to see why the Lightning is in such high demand.
5. Ford Mustang Mach-E
The Mustang Mach-E represents Ford’s first all-electric crossover SUV and delivers over 300 miles of range in its extended battery versions. It capture’s the Mustang’s sporty essence with up to 480 hp allowing a 0-60 mph time as quick as 3.5 seconds.
Despite the performance, pricing starts around $43,895. The entry-level Select trim qualifies for the full $7,500 tax credit, making this a fast and fun long-range EV attainable for far more buyers.
6. Ford E-Transit
Need an electric vehicle capable of serious work? The E-Transit cargo van offers a cost-effective, eco-friendly choice for businesses. Its low-speed 126-mile range perfectly suits local deliveries while qualifying for EV incentives.
With ample cargo capacity and a maximum payload of 3,520 pounds, the E-Transit can haul equipment or goods with ease. It offers plenty of configurations as well, with three roof heights and lengths up to 20 feet. The high-roof variation provides enough interior room for someone to stand upright inside.
7. Tesla Model 3
The Tesla Model 3 needs little introduction as one of the most popular electric vehicles ever made. With class-leading performance, technologies, and ranges reaching 370+ miles, it sets the benchmark for affordable EVs.
The rear-wheel-drive Standard Range Model 3 qualifies for the full $7,500 credit thanks to domestic sourcing and sub-$55K pricing. With 272 miles of range and 0-60 acceleration as quick as 5.3 seconds, it lacks nothing in capabilities.
8. Tesla Model Y
Following in its smaller sibling’s footsteps, the Tesla Model Y mid-size SUV also fully qualifies for the EV tax credit incentive. Over 330 miles of maximum driving range provides ample capabilities for road trips and daily commutes alike.
Its available third-row seating can accommodate larger families while retaining ample cargo room. And the Model Y handles impressively thanks to its low center of gravity integrating the battery pack into the chassis, with acceleration up to 3.5 seconds 0-60 mph in Performance variants.
EVs Now Qualifying For A $3,750 Credit
In addition to the 12 models above that remain eligible for the full $7,500 credit, a few additional EVs now only qualify for half of the maximum amount. Here are the cars eligible for a $3,750 federal tax credit as of April 2023:
1. Ford Escape Plug-In Hybrid
The Escape Plug-in Hybrid couples an electric motor with a gas engine for versatility on shorter trips under 40 miles. With 209 total system horsepower and an EPA rating of 100 MPGe, it balances green credentials with family-hauling practicality.
Starting at $33,550 before potential credits, its more affordable pricing broadens access to cutting fuel costs through electrification. Note that it only qualifies for a $3,750 federal tax credit at this time.
2. Jeep Wrangler 4xe
Jeep adds electric off-road abilities with its first plug-in hybrid, the Wrangler 4xe. Its hybrid powertrain produces 375 horsepower and 470 lb-ft of torque, delivering higher performance along with 25 miles of electric driving range.
The 4xe system enhances the iconic off-roader’s capabilities, giving instant electric torque at low speeds to master tough terrain. Pricing starts at $54,515 for unlimited trail exploration with a greener conscience.
3. Lincoln Corsair Grand Touring
Lincoln‘s Corsair compact luxury SUV is available as the Grand Touring plug-in hybrid, emphasizing comfort and refinement. An EPA rating of 28 miles electric and 25 combined mpg reduces fuel costs and environmental impact.
Advanced driver assists enhance everyday usability and safety. With pricing from $51,450, the well-equipped Corsair Grand Touring balances luxury with the latest electrified technology.
4. Mustang Mach-E Select
The Select trim of Ford’s Mustang Mach-E crossover SUV continues to qualify for federal tax credits as of April 2023. However, all Mach-E models besides this base version now only qualify for a $3,750 credit instead of the full $7,500 amount.
The rear-wheel-drive Select model offers a 270-mile range via standard-range battery enabling sub-$45K pricing. Despite the lowered tax savings, this special EV captures Mustang heritage starting under $44,000.
5. Tesla Model 3 Rear-Wheel Drive
Alongside its Model Y, Tesla’s Model 3 now sees lowered EV tax credit eligibility on some variants. As of April 2023, only the entry-level rear-wheel-drive Standard Range Plus model qualifies for any credits going forward.
By meeting criteria like US assembly and minimum US content, this version qualifies for a $3,750 credit. With 272 miles range and 0-60 mph acceleration under six seconds, it retains impressive capabilities. But other Model 3 configurations exceed the maximum price threshold after recent price increases.
Vehicles No Longer Eligible For Credits
Unfortunately the updated qualifications mean several popular EV models no longer qualify for any federal tax credits after April 17, 2023. Here are some of the key vehicles that lost eligibility:
- Audi e-tron SUV
- BMW i3
- Hyundai Ioniq Plug-In
- Kia Niro EV
- Nissan Leaf
- Polestar 2
- Porsche Taycan
- Rivian R1T pickup
- Rivian R1S SUV
- Volkswagen ID.4
- Volvo XC40 Recharge
While these models offer impressive EV driving ranges and technology, most are imported rather than meeting the latest domestic manufacturing criteria. So they no longer qualify for any federal tax incentives.
For buyers considering one of these now-excluded EVs, state or local incentives may provide some alternate savings. But losing eligibility for the $7,500 federal credit unfortunately reduces their cost-efficiency value to consumers.
What’s Required To Qualify For The $7,500 Tax Credit?
If you want to claim the maximum $7,500 federal tax credit for your new EV purchase, here are the updated requirements as of April 2023:
- The EV must have a minimum battery capacity of 7 kilowatt-hours
- It must weigh under 14,000 pounds gross vehicle weight rating
- A qualified manufacturer must assemble the vehicle
- Final EV assembly must occur in North America
- Minimum percentages of battery minerals and components must originate from the US or a trade partner country
- MSRP must stay under $55,000 for cars and $80,000 for pickups/SUVs
- Your tax liability must exceed the credit amount
- Adjusted gross annual income cannot exceed $300,000 joint or $150,000 individual
Note the updated criteria around sourcing battery materials from domestic or friendly locations. The IRS enforces these latest regulations to align with the inflation reduction act’s goals around promoting North American manufacturing.
So confirm that any EV still appears on the official qualified list before purchasing to guarantee your eligibility. The requirements may continue evolving over time under the dynamic policy landscape.
Are Other EV Incentives Available?
While the federal tax credit formerly provided the most valuable incentive, new state-level programs are aiming to fill gaps. For example, California just enacted a rebate ranging from $2,000 to $7,500 for EV purchases meeting certain criteria.
So investigate options in your particular state for additional ways to reduce purchasing costs. Local utilities also offer rebates in many areas for installing home charging stations.
Some buyers may also qualify for a federal tax credit up to $4,000 when buying a used EV. The vehicle must be at least two model years old and priced under $25,000. So purchasing a 3-4 year old Nissan Leaf or BMW i3 could make financial sense despite loss of new purchase incentives.
Conclusion
With many previous staples removed from eligibility, just twelve 2023 EV models can still claim the full $7,500 federal tax credit as of April 2023. Another six qualify for half of the maximum amount at $3,750.
Familiarize yourself with the current qualification details if seeking maximum savings on an electric vehicle purchase this year and beyond. Requirements will likely continue evolving over time to meet policy goals for domestic manufacturing growth. But substantial tax incentives remain to ease the transition for new EV buyers.
