The requirements have changed with the calendar, so fewer new cars, trucks and SUVs are now eligible for the tax break.
Ford
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Back in 2022, the United States government passed the The Inflation Reduction Act (IRA) — a law which, in spite of its name, was actually primarily concerned with fighting climate change and investing in American infrastructure. As part of those moves, the new law made some critical changes to the $7,500 federal tax credit available for electric vehicles. The law eliminated the 200,000-unit manufacturer cap that saw Tesla and GM EV buyers lose access to the credit prior to the IRA’s arrival — but it also imposed some onerous and confusing restrictions on which vehicles were eligible.
And, as it so happens, those restrictions continue to change with the years as part of the law’s structure. For 2024, the rules concerning the $7,500 tax credit have shifted once again, and the tweaks now mean fewer vehicles are eligible for the full amount. Here’s what you need to know — and which new electric cars, trucks and SUVs are still eligible.
What are the Federal EV Tax Credit changes for 2024?
Point-of-sale rebate: Dealers can offer the federal tax credit to buyers as a point-of-sale rebate, instead of them having to claim it on the following year’s taxes. This will actually lower the monthly payment for buyers.
FEOC: The government implemented a “foreign entities of concern” provision. Essentially, any vehicle sourcing components or critical materials from China, Iran, Russia or North Korea is not eligible for the federal tax credit. This provision eliminated several EVs from the list.
Electric Vehicles That Qualify for the 2024 Federal Tax Credit
2024 Ford F-150 Lightning
Ford
Ford F-150 Lightning
Specs
Powertrain
98.0 / 131.0 kWh battery + dual electric motors; all-wheel-drive
Horsepower
452 / 580
Torque
775 lb-ft
EPA Range
240–320 miles
Seats
5
Pros
Amazing power and acceleration
Smooth, quiet ride
Does almost everything a gas-powered F-Series can do (which is to say, a lot)
Cons
Real-world range just okay
… and plain awful when towing
Not cheap
Both standard and long-range versions of the 2024 F-150 Lightning are eligible for the full federal tax credit.
MSRP Limit: $80,000
Credit Amount: $7,500
2024 Rivian R1S
Riviab
Rivian R1S
Specs
Powertrain
105 / 130 / 149-kWh battery, two or four electric motors; all-wheel-drive
Horsepower
530–835
Torque
610–908 lb-ft
EPA Range
260–400 miles
Seats
5–7
Pros
Great range for an EV SUV
Sports car-like acceleration and power
Novel features
Cons
No Apple CarPlay
New cars from new carmakers can have start-up problems
The Rivian R1S can qualify for a $3,750 federal tax credit. But buyers must select the base Dual-Motor AWD and Standard Pack setup to keep the starting MSRP under $80,000.
MSRP Limit: $80,000
Credit Amount: $3,750
2024 Rivian R1T
Rivian
Rivian R1T
Specs
Powertrain
105 / 130 / 149-kWh battery, two or four electric motors; all-wheel-drive
Horsepower
533–835
Torque
610–908 lb-ft
EPA Range
270–410 miles
Seats
5
Pros
Sports car-like acceleration and handling
Impressive range for an EV truck
Great for camping
Cons
No Apple CarPlay
Automotive start-ups can come with start-up problems
Rivian R1T trucks configured with an MSRP below $80,000 are eligible for a $3,750 federal tax credit.
MSRP Limit: $80,000
Credit Amount: $3,750
2024 Tesla Model 3
Tesla
Tesla Model 3
Specs
Powertrain
58 / 82 kWh battery, single or dual electric motors; rear- or all-wheel-drive
Horsepower
Undisclosed
Torque
Undisclosed
EPA Range
272–341 miles
Seats
5
Pros
Very affordable for its capabilities
Fun to drive
Tech-centric connected features
Access to Supercharger network
Cons
Unconventional user interface
Real-world range falls short of estimates
The Elon Stigma
The Model 3 Performance trim is eligible for the full $7,500 federal tax credit. (Note, however, that this trim is no longer in production, so you’ll have to find one still on dealer lots.)
MSRP Limit: $55,000
Credit Amount: $7,500
2024 Tesla Model X
Tesla
Tesla Model X
Specs
Powertrain
100 kWh battery pack, dual electric motors; all-wheel-drive
Horsepower
670–1,020
Torque
Undisclosed
EPA Range
300–335 miles
Seats
4–7
Pros
Crazy acceleration with Plaid model
Ample interior room
“Falcon doors” make for easy entry and exit
Ample tech-centric connected features
Cons
“Falcon doors” also unnecessarily complicated
Real world range not as good as EPA estimates suggest
The Elon Stigma
The absolute base Tesla Model X with no options is eligible for the full $7,500 federal tax credit.
MSRP Limit: $80,000
Credit Amount: $7,500
2024 Tesla Model Y
Tesla
Tesla Model Y
Specs
Powertrain
68 / 81 kWh battery pack, single or dual electric motors; rear- or all-wheel-drive
Horsepower
Undisclosed
Torque
Undisclosed
EPA Range
260–310 miles
Seats
5
Pros
Hits the sweet spot of EV and crossover capabilities
Affordable for what it offers
Access to Supercharger network
Cons
User interface not ideal
Generic appearance
The Elon Stigma
All versions of the Tesla Model Y are eligible for the full $7,500 federal tax credit in 2024.
MSRP Limit: $80,000
Credit Amount: $7,500
2024 Volkswagen ID.4
Volkswagen
VW ID.4 Pro
Specs
Powertrain
82 kWh lithium-ion battery, single or dual electric motors; rear- or all-wheel-drive
Horsepower
295
Torque
229 lb-ft
EV Range:
255 miles
Seats
5
Pros
Attractive design
Reasonable range for the money
Cons
Performance just okay
Questionable user interface choices
While it wasn’t initially available at the start of the year for the federal tax credit, Volkswagen announced on January 26th that the ID.4 electric crossover has now been ruled eligible for the money from Uncle Sam. All models are eligible, but we recommend going for the long-range ID.4 Pro that boosts EPA range to 275 miles from the base model’s 209.
MSRP Limit: $80,000
Credit Amount: $7,500
2024 Cadillac Lyriq
Cadillac
Cadillac Lyriq
Specs
Powertrain
100 kWh battery pack, single or dual electric motors; rear- or all-wheel-drive
Horsepower
340–500
Torque
325–450 lb-ft
EPA Range
307–314 miles
Seats
5
Pros
Elegant design
Solid range
Rather affordable, for a Cadillac
Cons
Ultium platform still somewhat untested
Limited production so far
As of late February, the Cadillac Lyriq has officially become eligible for the full $7,500 federal tax credit, according to the EPA. (Its sister model, the Chevrolet Blazer EV, will likely join it here once the stop-sale order on said Chevy is lifted and its gremlins fixed.) This presumably means it’s no longer eligible for GM’s $7,500 cash-on-hood discount, but hey, maybe you can get lucky and find a dealer willing to double-dip if you act fast.
MSRP Limit: $80,000
Credit Amount: $7,500
What Makes an EV Eligible for the Federal Tax Credit
Ford
Critical minerals: Vehicles currently need 40 percent of their critical minerals by value to be extracted, processed or recycled in the United States or a country with a free trade agreement. This makes the vehicle eligible for a $3,750 credit. That threshold will increase to 80 percent by 2026.
Battery components: Vehicles must have 50 percent of the battery components made in North America. This makes the vehicle eligible for an additional $3,750 credit. That threshold will increase to 90 percent by 2028.
Price Limits: Congress set MSRP limits for vehicles eligible for the credit. To be eligible, the MSRP must be below $55,000 for cars and $80,000 for trucks, SUVs and vans.
Income Limits: The federal EV tax credit is now limited by income. Buyers must earn an adjusted gross income less than $150,000 annually or $300,000 for a married couple to receive the federal tax credit.
Non-refundable: Remember that the federal EV tax credit is non-refundable. It can offset the money you owe to the government, but it can not add to your refund.
Leasing an EV may be a better option
Hyundai
Leasing can be a way to work around the requirements for receiving a $7,500 federal tax credit. Basically, a lease is considered a commercial vehicle purchase by the leasing company. Commercial purchases face far fewer eligibility requirements for the vehicle to receive the $7,500 tax credit. The company offering the lease can (but is not obligated to) extend the amount of that credit to the customer to offset the cost of a lease. The income level of the customer and his or her tax refund status don’t come into play.
Some plug-in hybrids are also eligible for the Federal EV Tax Credit
FCA US LLC
Five plug-in hybrids are currently eligible to receive a federal tax credit. The Chrysler Pacifica PHEV can receive a full $7,500. The Lincoln Corsair PHEV, Ford Escape PHEV, Jeep Grand Cherokee 4xe and Jeep Wrangler 4xe PHEVs can receive a $3,750 credit.
Other EVs and PHEVs may become eligible later in 2024
Ford
Of course, it wouldn’t be a government program if there weren’t some bureaucratic issues still working their way through the system. In this case, several other automakers were reportedly still submitting their documents to the feds after the December 18th, 2023 deadline set by the Treasury Department.
A January 1st report from Reuters states that General Motors expects that the Chevy Equinox EV and Silverado EV, GMC Sierra EV and Cadillac Optiq also expected to be eligible for the full $7,500 credit when they go on sale later in 2024.
Assuming all goes according to plan, these other automakers’ EVs should become eligible later on this year. We’ll be sure to update this list as new data becomes available, so watch this space.