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As sales of electric vehicles continue to grow in 2024, many new and prospective customers have questions about qualifying for a federal tax credit on electric vehicles. Whether your vehicle qualifies or not is a simple yes or no question, but the amount you may qualify for varies by household due to a number of different factors. Luckily, we have compiled everything you need to know about tax credits for your new or current electric vehicle into one place.

Table of contents

How does a federal tax credit work for my EV?

The idea in theory is quite simple, per the IRS – “You may qualify for a credit up to $7,500 under Internal Revenue Code Section 30D if you buy a new, qualified plug-in EV or fuel cell electric vehicle (FCV). The Inflation Reduction Act of 2022 changed, but extended the terms for this credit for vehicles purchased between 2023 to 2032.

That said, you cannot simply go out and buy an electric vehicle and expect Uncle Sam to cut $7,500 off your taxes come April. In reality, the amount you qualify for is based on both your income tax as well as several specifications of the electric vehicle you purchase, including where it’s built. More on that below.

First, let’s take a second to truly understand how the Federal EV tax credit currently works.

How much is the federal tax credit?

First and foremost, it’s important to understand three little words the government slips in front of the $7,500 credit – “may” and “up to.” As in, you may qualify for up to $7,500 in federal tax credit for your electric vehicle. At first glance, this credit may sound like a simple flat rate, but that is unfortunately not the case.

For example, if you purchased a Tesla Model 3 and owed say, $3,500 in income tax for the year, then that is the federal tax credit you would receive. If you owed $10,000 in federal income tax, then you would qualify for the full $7,500 credit.

It’s important to note that any unused portion of the $7,500 is not available as a refund nor as a credit for next year’s taxes. Bummer.

2024 Tesla Prices
The 2024 Model 3 / Source: Tesla

Federal Tax Credits under the Inflation Reduction Act

The following terms were introduced by the Biden Administration in the summer of 2022 and went into effect on January 1, 2023:

  • Federal tax credit for EVs will remain at $7,500
    • The timeline to qualify is extended a decade from January 2023 to December 2032
  • Tax credit cap for automakers after they hit 200,000 EVs sold is eliminated, making GM, Tesla, and Toyota once again eligible
  • The language in the bill indicates that the tax credit could be implemented at the point of sale instead of on taxes at the end of the fiscal year
    • That means you can get your credit up front at the dealer, but these terms may not kick in until 2024
  • In order to get the full tax credit, the EV must be assembled in North America and…
    • Two binary pieces separate the full $7,500 credit meaning the vehicle either qualifies for each piece of the credit or doesn’t
    • $3,750 of the new credit is based upon the vehicle having at least 40% of its battery-critical minerals from the United States or countries with a free trade agreement with the United States. This is a list of countries with free trade agreements with the US.
    • The other $3,750 of the new credit is based on at least 50% of the battery components of the vehicle coming from the United States or countries with a free trade agreement with the US
    • Note – these battery requirements are now being enforced as April 18, 2023. More below.
    • The 40% minerals requirement increases to 50% in 2024, 60% in 2025, 70% in 2026 and 80% in 2027
    • The 50% battery components requirement increases to 60% in 2024, 70% in 2026, 80% in 2027, 90% in 2028 and 100% in 2029
    • Beginning in 2025, any vehicle with battery minerals or components from a foreign entity of concern is excluded from the tax credit
  • Qualifying EVs must also have a battery size of at least 7 kWh and a gross vehicle weight rating of less than 14,000 pounds
  • A new federal tax credit of $4,000 for used EVs priced below $25k
    • Subject to other requirements like lower annual income (see below)
  • Revised credit applies to battery electric vehicles with an MSRP below $55,000
  • Also includes zero-emission vans, SUVs, and trucks with MSRPs up to $80,000
  • New credit also expands to commercial fleet customers
    • Includes separate qualifications and limits
  • The federal EV tax credit will be available to individuals reporting adjusted gross incomes of $150,000 or less, $225,000 for heads of households, or $300,000 for joint filers
  • The new credit will also continue to apply to Plug-in Hybrid EVs (PHEVs) as long as they meet the same requirements outlined above

Revamped used electric vehicle tax credit

Used EVs also got revised terms that now offer a credit equal to 30% percent of the sale price (up to $4,000). That should help consumers like yourselves get some change back in your pocket at the end of the fiscal year. As long as you stick to these terms as outlined by the IRS.

To qualify as a customer, you must:

  • Be an individual who bought the vehicle for use and not for resale
  • Not be the original owner
  • Not be claimed as a dependent on another person’s tax return
  • Not have claimed another used clean vehicle credit in the three years before the EV purchase date
  • Modified adjusted gross income must not exceed $75k for individuals, $112,500 for heads of households, and $150k for joint returns

For the used EV to qualify for federal tax credits, it must:

  • Have a sale price of $25,000 or less
  • Have a model year at least two years earlier than the calendar year when you buy it
    • For example, a vehicle purchased in 2023 would need a model year of 2021 or older
  • Not have already been transferred after August 16, 2022, to a qualified buyer
  • Have a gross vehicle weight rating of less than 14,000 pounds
  • Be an eligible FCV or plug-in EV with a battery capacity of at least 7 kilowatt hours (kWh)
  • Be for use primarily in the United States
  • You buy the vehicle from a dealer
    • For qualified used EVs, the dealer reports the required information to you at the time of sale and to the IRS
  • Purchaser must be an individual (no businesses) to qualify for used credit
  • A used vehicle qualifies for tax credit only once in its lifetime

The IRS’ latest electric vehicle tax credit guidance

In October 2023, the IRS released updated guidance on federal tax credits for EV purchases in the US that now allow for point-of-sale federal tax credits rather than having to wait until you file to get your money back, beginning January 1, 2024. Per the IRS:

The Internal Revenue Service issued proposed regulationsRevenue Procedure 2023-33 (PDF) and frequently asked questions today for the transfer of new and previously owned clean vehicle credits from the taxpayer to an eligible entity for vehicles placed in service after Dec. 31, 2023.

This “transfer” is essentially the ability of a new EV buyer to give the tax credit to the dealer selling them their shiny new EV. In exchange, the dealer can give the equivalent “in cash or in the form of a partial payment or down payment.”

However, all the same eligibility criteria still apply even with a transfer, including the buyer having a federal tax burden.

The buyer must give the dealer all their tax information, which will then be submitted to the IRS. The dealer is not required to verify the information, and therefore, the disclosure falls on the buyer. All the other previous vehicle requirements, like MSRP limits, and for the buyers, like income limit requirements, apply here.

The only requirement that this update allows you to avoid is your tax burden. If, for some reason, you can afford to buy a new car and yet you happen to have a tax burden smaller than the full amount of tax credit you are eligible for, the IRS says that it won’t “recapture” the difference.

Vehicles that qualify for federal tax credits (January 2024)

Battery Electric Vehicles (BEVs)

Make and Model MSRP Limit Tax Credit Amount
CHEVROLET (GM)
Bolt EUV (2022-2023) $55,000 Up to $7,500
Bolt EV (2022-2023) $55,000 Up to $7,500
FORD
F-150 Lightning Standard Battery (2022-2024) $80,000 Up to $7,500
F-150 Lightning Extended Battery (2022-2024) $80,000 Up to $7,500
RIVIAN
R1T Dual Motor Large Pack (2022-2024) $80,000 Up to $3,750
R1T Dual Motor Max Pack (2022-2024) $80,000 Up to $3,750
R1T Quad Motor Large Pack (2022-2024) $80,000 Up to $3,750
R1S Dual Motor Large Pack (2022-2024) $80,000 Up to $3,750
R1S Quad Motor Large Pack (2022-2024) $80,000 Up to $3,750
TESLA
Model 3 Performance (2023-2024) $55,000 Up to $7,500
Model X Long Range (2023-2024) $80,000 Up to $7,500
Model Y Rear Wheel Drive (2024) $80,000 Up to $7,500
Model Y All Wheel Drive (2023-2024) $80,000 Up to $7,500
Model Y Performance (2023-2024) $80,000 Up to $7,500
Current as of 1/3/24 (changes in bold)
Rivian Range

Plug-in Hybrid Electric Vehicles (PHEVs) that currently qualify

Make and Model MSRP Limit Full Tax Credit
CHRYSLER
Pacifica Plug-in Hybrid (2022-2024) $80,000 Up to $7,500
FORD
Escape Plug-in Hybrid (2022-2024) $80,000 Up to $3,750
JEEP
Grand Cherokee 4xe (2022-2024) $80,000 Up to $3,750
Wrangler 4xe (2022-2024) $80,000 Up to $3,750
LINCOLN
Corsair Grand Touring (2022-2024) $80,000 Up to $3,750
Current as of 1/3/24 (changes in bold)

Find out where an EV is assembled using its VIN

The US Department of Energy offers a VIN decoder tool to confirm where a given EV is assembled. Check it out here.

Our complete breakdown of state tax incentives, sorted by state

In addition to any federal credit you may or may not qualify for, there are a number of clean transportation laws, regulations, and funding opportunities available at the state level.

We’ve compiled every state rebate, tax credit, and exemption for you and sorted it by state. Whether it’s a purchase or lease of a new or used EV or the purchase and installation of an EV charger, you could get money back, depending upon where you live.
Here are all those tax credits, rebates, and exemptions sorted by state.

electric vehicle tax credit
Source: Fueleconomy.gov

Electric Vehicle (EV) Tax Credit FAQ

How does the EV tax credit work?

At the federal level, the tax credits for EVs (electric cars, vans, trucks, etc) operate as money back at the end of the fiscal year you purchased or leased your vehicles based on a number of factors.

The awarded credit is up to $7,500 per vehicle, but how much you may get back will depend on your annual income, whether you are filing with someone else like a spouse, and what electric vehicle you purchased.

For example, if you purchased a Ford F-150 Lightning and owed $3,500 in income tax this year, then that is the federal tax credit you would receive. If you owed $10,000 in federal income tax, then you could qualify for the full $7,500 credit.

It’s important to note that any unused portion of the $7,500 is not available as a refund nor as a credit for next year’s taxes.

You may also be able to receive money back right away as a point-of-sale credit, but those terms probably won’t kick in until 2024 at the earliest.

What electric vehicles qualify for tax credits?

As things currently stand, there is a lot up in the air right now. The first table above details all of the electric vehicles that qualify under the terms of the Inflation Reduction Act, including battery guidance. Be sure to check the date at the bottom of each table above to see when it was most recently updated.

What electric vehicles qualify for the new tax credits in 2024?

As previously mentioned, qualifying terms for electric vehicles became more strict at the start of 2023, and EVs and their battery components must be assembled in North America to qualify.

As you can see above, significantly fewer electric vehicles qualify under the new terms, but as time goes on, more and more automakers will adapt their production strategies to operate within North America and start selling vehicles that qualify.

American companies like Ford, GM, and Tesla already have EVs that qualify to some extent, but others are sure to follow. We will continually update the list above as we learn more.

Do hybrids qualify for tax credits?

Excellent question. Since traditional hybrid vehicles rely primarily on combustion and do not use a plug to charge, they do not qualify for tax credits at the federal level. Credits apply to plug-in electric vehicles which include plug-in hybrid EVs and battery electric vehicles (BEVs).

Do used electric cars qualify for federal tax credits?

Yes! Under revised terms in the Inflation Reduction Act. Used EVs will now qualify in addition to new vehicles as previously stated.

As of January 1, 2023, qualifying used EVs priced below $25,000 can qualify for up to $4,000 in federal tax credits. There are some terms to note, however:
– Used vehicle qualifies for tax credit only once in its lifetime.
– Purchaser must be an individual (no businesses) to qualify for the used vehicle credit.
– Purchaser may only claim one used vehicle credit per three years.

– Used vehicle must be at least two model years old at the time of sale.
– The original use of the vehicle must have occurred with an individual other than the one claiming the used tax credit.
– Used vehicle must be purchased from a dealer.
– Gross income cap of $75k for individuals, $112,500 for heads of households, and $150k for joint returns.
– Credit may be applied at the time of sale by the dealer

Are there price caps for electric vehicles to qualify for tax credits?

Yes.
Under the new terms in the Inflation Reduction Act, the MSRP of electric vehicles must be $80,000 or less for SUVs, vans, and trucks. MSRPs for all other electric vehicles must be $55,000 or less.

What are the income limits to qualify for any federal EV tax credits?

Modified adjusted gross income limits are $150,000 for individuals, $225,000 for heads of households, and $300,000 for joint returns. Any reported annual income below these thresholds should qualify you for some level of tax credit, as long as your new purchase is a qualifying electric vehicle.

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Caterpillar is putting MASSIVE 240-ton electric haul truck to work in Vale mine

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Caterpillar is putting MASSIVE 240-ton electric haul truck to work in Vale mine

Mining company Vale is turning to Caterpillar to provide this massive, 240-ton battery-electric haul truck in a bid to slash carbon emissions at its mines by 2030.

Caterpillar and Vale have signed an agreement that will see the Brazilian mining company test severe-duty battery electric mining trucks like the 793 BEV (above), as well as V2G/V2x energy transfer systems and alcohol-powered trucks. The test will help Vale make better equipment choices as it works to achieve its goals of reducing direct and indirect carbon emissions 33% by 2030 and eliminating 100% of its net emissions by 2050.

If that sounds weird, consider that most cars and trucks in Brazil run on either pure ethyl alcohol/ethanol (E100) or “gasohol” (E25).

“We are developing a portfolio of options to decarbonize Vale’s operations, including electrification and the use of alternative fuels in the mines. The most viable solutions will be adopted,” explains Ludmila Nascimento, energy and decarbonization director Vale. “We believe that ethanol has great potential to contribute to the 2030 target because it is a fuel that has already been adopted on a large scale in Brazil, with an established supply network, and which requires an active partnership with manufacturers. We stand together to support them in this goal.”

Vale will test a 240-ton Cat 793 battery-electric haul truck at its operations in Minas Gerais, and put energy transfer solutions to a similar tests at Vale’s operations in Pará over the next two-three years. Caterpillar and Vale have also agreed to a joint study on the viability of a dual-fuel (ethanol/diesel) solution for existing ICE-powered assets.

Vale claims to be the world’s largest producer of iron ore and nickel, and says it’s committed to an investment of between $4 billion to $6 billion to meet its 2030 goal.

Cat 793 electric haul truck

During its debut in 2022, the Cat 793 haul truck was shown on a 4.3-mile test course at the company’s Tucson proving grounds. There, the 240-ton truck was able to achieve a top speed of over 37 mph (60 km/h) fully loaded. Further tests involved the loaded truck climbing a 10% grade for a full kilometer miles at 7.5 mph before unloading and turning around for the descent, using regenerative braking to put energy back into the battery on the way down.

Despite not giving out detailed specs, Caterpillar reps reported that the 793 still had enough charge in its batteries for to complete more testing cycles.

Electrek’s Take

Caterpillar-electric-mining-truck
Cat 793 EV at 2022 launch; via Caterpillar.

Electric equipment and mining to together like peanut butter and jelly. In confined spaces, the carbon emissions and ear-splitting noise of conventional mining equipment can create dangerous circumstances for miners and operators, and that can lead to injury or long-term disability that’s just going to exacerbate a mining operation’s ability to keep people working and minerals coming out of the ground.

By working with companies like Vale to prove that forward-looking electric equipment can do the job as well as well as (if not better than) their internal combustion counterparts, Caterpillar will go a long way towards converting the ICE faithful.

SOURCES | IMAGES: Caterpillar, Construction Equipment, and E&MJ.

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Argonne Nat’l Lab is spending big bucks to study BIG hydrogen vehicles

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Argonne Nat'l Lab is spending big bucks to study BIG hydrogen vehicles

Argonne National Laboratory is building a new research and development facility to independently test large-scale hydrogen fuel cell systems for heavy-duty and off-road applications with funding from the US Department of Energy.

The US Department of Energy (DOE) is hoping Argonne Nat’l Lab’s extensive fuel cell research experience, which dates back to 1996, will give it unique insights as it evaluates new polymer electrolyte membrane (PEM) fuel cell systems ranging from 150 to 600 kilowatts for use in industrial vehicle and stationary power generation applications.

The new Argonne test facility will help prove (or, it should be said, disprove) the validity of hydrogen as a viable fuel for transportation applications including heavy trucks, railroad locomotives, marine vessels, and heavy machines used in the agriculture, construction, and mining industries.

“The facility will serve as a national resource for analysis and testing of heavy-duty fuel cell systems for developers, technology integrators and end-users in heavy-duty transportation applications including [OTR] trucks, railroad locomotives, marine vessels, aircraft and vehicles used in the agriculture, construction and mining industries,” explains Ted Krause, laboratory relationship manager for Argonne’s hydrogen and fuel cell programs. “The testing infrastructure will help advance fuel cell performance and pave the way toward integrating the technology into all of these transportation applications.”

The Hydrogen and Fuel Cell Technologies Office (HFTO) of DOE’s Office of Energy Efficiency and Renewable Energy is dedicating about $4 million to help build the new Argonne facility, which is set to come online next fall.

Electrek’s Take

Medium-sized Hydrogen FC excavator concept; via Komatsu.

It’s going to be hard to convince me that the concentrated push for a technology as inefficient as hydrogen fuel cells has more to do with any real consumer or climate benefit than it does keeping the throngs of people it will take to manufacture, capture, transport, store, house, and effectively dispense hydrogen gainfully employed through the next election cycle.

As such, while case studies like the hydrogen combustion-powered heavy trucks that have been trialed at Anglo American’s Mogalakwena mine since 2021 (at top) and fuel cell-powered concepts like Komatsu’s medium-sized excavator (above) have proven that hydrogen as a fuel can definitely work on a job site level while producing far fewer harmful emissions than diesel, I think swappable batteries like the ones being shown off by Moog Construction and Firstgreen have a far brighter future.

Speaking of Moog, we talked to some of the engineers being their ZQuip modular battery systems on a HEP-isode of The Heavy Equipment Podcast a few months back. I’ve included it, below, in case that’s something you’d like to check out.

SOURCES | IMAGES: ANL, Komatsu, and NPROXX.

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Velocity truck rental adds 47 high-speed truck chargers to California dealer network

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Velocity truck rental adds 47 high-speed truck chargers to California dealer network

Velocity truck rental is doing its part to help commercial fleets electrify by energizing 47 high-powered charging stations at four strategic dealer locations across Southern California. And they’re doing it now.

The new Velocity Truck Rental & Leasing (VTRL) charging network isn’t some far-off goal being announced for PR purposes. The company says its new chargers are already in the ground, and set to be fully online and energized by the end of this month at at VTRL facilities in Rancho Dominguez (17), Fontana (14), the City of Industry (14), and San Diego (2).

45 120 kW Detroit e-Fill chargers make up the bulk of VTRL’s infrastructure project, while two DCFC stations from ChargePoint get them to 47. All of the chargers, however, where chosen specifically to cater to the needs of medium and heavy-duty battery electric work trucks.

The company says it chose the Detroit e-Fill commercial-grade chargers because they’ve already proven themselves in Daimler-heavy fleets with their ability to bring Class 8 Freightliner eCascadias, Class 6 and 7 Freightliner eM2 box trucks, and RIZON Class 4 and 5 cabover trucks, “to 80% state of charge in just 90 minutes or less.”

At Velocity, we are not just reacting to the shift towards electric mobility; we are at the forefront with our customers and actively shaping it. By integrating high-powered, commercial-grade charging solutions along key transit corridors, we are ensuring that our customers have the support they need today. This charging infrastructure investment is a testament to our commitment to helping our customers transition smoothly to electromobility solutions and to prepare for compliance with the Advanced Clean Fleets (ACF) regulations.

David Deon, velocity president

Velocity plans to offer flexible charging options to accommodate the needs of different fleets, including both managed, “charging as a service” subscription plans and self-managed/opportunity charging during daily routes. While trucks are charging, drivers and operators will be able to relax in comfortable break rooms equipped with WIFI, television, snacks, water, and restrooms.

Electrek’s Take

Image via DTNA.

While it feels a bit underwhelming to write about trucking companies simply following the letter of the law in California, the rollout of an all-electric, zero-emission commercial trucking fleet remains something that, I think, should be celebrated.

As such, I’m celebrating it. I hope you are, too.

SOURCE | IMAGES: Global Newswire; Daimler Trucks.

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