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On April 17, the US Treasury Department updated its list of electric vehicles that qualify for $7,500 in tax credits for 2023, with US brands such as GM and Tesla likely to get the biggest raise.
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The new credits are effective April 18, 2023, and run through 2032. They were originally included in the Inflation Reduction Act of 2022 and are intended to encourage more Americans to ditch gas cars, while and that some electric-gas hybrids are also eligible for the credits. .
The following electric vehicles qualify for the full $7,500 federal tax credit, according to USA Today:
- Cadillac Lyriq
- Chevrolet Blazer
- Chevrolet Bolt
- Chevrolet Bolt and EUV
- Chevrolet Equinox
- Chevrolet Silverado
- Chrysler Pacifica PHEV
- Ford F-150 Lightning
- Lincoln Aviator Grand Touring
- Tesla Model 3 performance
- Tesla Model Y (all-wheel drive, long-range all-wheel drive and performance 2022)
In addition, these vehicles qualify for a partial tax credit ($3,740):
- Ford Escape plug-in hybrid
- Ford E-Transit
- Ford Mustang Mach-E
- Jeep Grand Cherokee PHEV 4xe
- Jeep Wrangler PHEV 4xe
- Lincoln Corsair Grand Touring
- Tesla Model 3 standard range rear wheel drive
“The big news here is that it’s based on [first-quarter 2023] sales volumes, more than 90% of vehicles that were eligible for the credit prior to April 18 are still eligible, with the vast majority eligible for the full credit,” said Albert Gore, executive director of the Transportation Association of Zero Emissions, in a statement.
In some cases, tax credits will make electric car prices lower than comparable gasoline cars. As The New York Times reported, Tesla recently dropped the price of its Model 3 sedan by $1,000 to $41,990 because that version only qualifies for a partial tax credit. With the credit, many buyers will pay a little more than $38,000, about as much as a top-of-the-line Honda Accord and cheaper than an entry-level BMW 3 Series sedan.
As GOBankingRates has previously reported, in some cases the money you save by not having to do gas can add up over time. Here’s an example of how much it cost to fuel or fuel comparable gas cars and electric vehicles when national average gas prices averaged about $3.80 a gallon (they’ve since moved closer to $3.60 dollars):
- 2022 Honda Accord Sport (ICE): $1,929 in fuel costs over 15,000 miles
- 2022 Kia EV6 Wind (EV): $605 in electric costs over 15,000 miles
The electric vehicle tax credit is available to both individuals and their businesses as long as they meet certain requirements. These include buying the EV for your own use rather than reselling it and using it primarily in the United States, according to the IRS. Also, your modified adjusted gross income (AGI) cannot exceed $300,000 for married couples filing jointly; $225,000 for heads of household; and $150,000 for all other filers.
The new rules also mean that some electric and hybrid vehicles no longer qualify for the tax credit. CBS News mentioned nearly a dozen models, including those made by BMW, Nissan, Volvi, Audi and Volkswagen.
“Some models that were rated as recently as last week are now off the list, which adds a bit of confusion,” Doug DeMuro, a YouTube car reviewer and founder of Cars & Bids, told GOBankingRates in an email
See: 8 Electric Cars You May Regret Buying
Learn: How much does it cost to charge an electric car?
That confusion extends not just to consumers, but to automakers, some of which “will see electric vehicle sales fall as a direct result of their vehicles no longer qualifying for tax credits,” DeMuro added.
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