EV Federal Tax Credit

The US government has released guidance that will make it harder for EVs to qualify for the full $7,500 tax credit if their batteries contain Chinese components or minerals.

The Biden administration is expected to announce on Friday what will disqualify EVs from eligibility for the $7,500 subsidy. However, the government is reportedly discussing granting automakers a temporary reprieve from the proposed restrictions on EVs containing battery parts or materials coming from China. 

The IRS released new guidance on the EV tax credit today, and the changes mean that starting next year, low- and middle-income buyers will be able to get the full $7,500 credit even if they don’t have enough tax liability.

With more mainstream curiosity surrounding EVs, bolstered by a ten year extension in federal tax credits under the Inflation Reduction Act, there’s never been a more exciting time to buy an EV, and there has never been a wider selection of options to choose from. What many US consumers may not be aware of, however, is what electric vehicle tax credits may be available to them at the state level in addition to discounts or money back on EV charger installations. Luckily for you, we’ve broken it all down, state-by-state, below. Note: This data has been updated as of July 2023.

Colorado is trailblazing with a new law that ramps up impressive EV state tax credits for both purchases and leases.

VW has become the first non-US automaker that qualifies for the full $7,500 US federal EV tax credit.

German automaker Volkswagen Group is looking to more than double its current share of the US market by prioritizing EV production in North America. By adhering to new terms laid out in the Biden Administration’s Inflation Reduction Act, Volkswagen intends to deliver at least 25 all-electric models over the next seven years that will qualify for the entire $7,500 federal tax credit.

Last week, the IRS updated the EV tax credit with new battery sourcing requirements set to go into place on April 17, with the effect of lowering purchase credit amounts for many new EVs.

But since the law defines individual and commercial credits differently, those requirements – along with MSRP and income requirements – can be bypassed on consumer-leased vehicles.

The US Treasury Department today announced its expected EV tax credit guidance on the battery component and critical mineral sourcing requirements of the Inflation Reduction Act, changing the availability of EV tax credits in the US, with the net effect of reducing tax credit amounts for many vehicles purchased on April 18 or later.

Update: some manufacturers have issued statements about which cars will and won’t qualify for the full credit, we will append updates the end of the post below as we get more information.

The United States and Japan have struck a trade deal for battery minerals, according to Reuters. This deal could potentially allow Japanese electric cars greater access to US EV tax credits in the Inflation Reduction Act.

German automaker and VW Group subsidiary Audi is flirting with the idea of implementing EV production on US soil, so its vehicles can once again qualify for federal tax credits under new terms outlined in the Inflation Reduction Act. Audi CEO Markus Duesmann recently shared a couple of possibilities Audi is considering in a potential move to the states.

In short, Joe Manchin opposes EV adoption. Straight up. In his latest obstruction against electric vehicles and limiting carbon emissions, the Democratic Senator representing the nation’s second-largest supplier of coal has introduced a new bill that immediately calls for strict enforcement of revised terms for EV tax credits laid out in last year’s Inflation Reduction Act – many of which Manchin wrote himself. We won’t disagree that the government needs guidance to enable these credits, but the senator’s bill is as promising as a future in which we continue relying on fossil fuels.

The US Treasury has released new guidelines on the electric vehicle tax credit in the Inflation Reduction Act, which seem to suggest that leased vehicles can qualify for the EV tax credit even if they were assembled outside of North America, Reuters reports.

The Chevy Bolt is already a great enough deal to get our Electrek Vehicle of the Year award, but after the US Treasury delayed its guidance on battery sourcing requirements, that deal might be even better – but only for the next couple of months.

Update: Treasury finally released its battery guidance, but now that everything has shaken out, it looks like the Chevy Bolt still qualifies for the full $7,500 credit. So the Bolt is still a screaming deal, as long as you can find one.

The United States Treasury department announced it will delay its guidance in regard to the sourcing requirements for battery materials in order for EVs to qualify for federal tax credits. Beginning January 1, 2023, a slew of new requirements will still take effect, but the lack of battery guidelines could offer a brief window in 2023 where electric vehicle purchases that may not fit the pending battery sourcing requirements still qualify for some level of tax credits.

The Inflation Reduction Act, the major climate bill, was signed August 16, changing the availability of electric vehicle tax credits. The law is still in the process of being implemented, so tax credit qualifications continue to change as the IRS offers further guidance. This post intends to break down the current eligibility requirements for the EV tax credit as they continue to be updated.

Volkswagen Group CEO Oliver Blume recently shared that the company is actively searching for a home for its first battery cell factory in North America. Furthermore, Blume has named Canada specifically as “one logical option.” By joining Volkswagen’s current EV production footprint in Tennessee, the Group may soon meet the battery manufacturing requirements outlined in the Inflation Reduction Act for vehicles like the ID.4 to continue to qualify for US federal tax credits, while opening the door for more EVs under its umbrella to qualify.

You may be in luck if you’re looking to buy an electric vehicle. A new bill introduced in the US Congress called the Affordable Electric Vehicles for America Act would allow essentially all EVs in the US to qualify for the $7,500 tax credit if passed.

The European Union has asked the United States to include EVs, batteries, and other sustainable products sold on US soil in federal tax credits, similar to benefits it currently offers its North American neighbors. According to a recent report, the US and EU are in discussions about what’s possible.

General Motors CEO Mary Barra spoke with analysts Tuesday, saying GM’s EV models will be able to qualify for the full tax credit in two to three years.

Georgia Senator Reverend Warnock introduced a new bill that would expand which electric vehicles qualify for a tax credit through the Inflation Reduction Act. The Affordable Electric Vehicles for America Act would give automakers like Hyundai a “grace period” to build and assemble EVs in North America, allowing them to qualify for the tax credit.