How to Claim an EV Tax Credit

As the world gravitates towards electric vehicles, owners and potential buyers need to be educated on how to leverage their investment in this technology. They can start by learning how to claim the tax credit available for the purchase of an electric car. To increase the consumer base of electric vehicles and plug-in hybrid vehicles (PHEVs), the federal government is offering a tax credit worth up to $7,500, which people can claim, provided the car qualifies . Until the Inflation Reduction Act (IRA) was passed, any manufacturer of electric vehicles and plug-in hybrid vehicles selling 200,000 units was no longer eligible for the credit. As a result, popular brands like Tesla, Toyota, and General Motors have long since reached their limit.

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Demand for electric vehicles continues to grow amid an ongoing supply shortage, forcing automakers to lengthen waiting lists and increase retail quantities of their models. Interestingly, some of the crowd is not keen on switching from gas-powered vehicles due to range anxiety, among other concerns. However, these consumers may need to rethink their stance, especially when California recently announced plans to ban the sale of new gasoline or diesel vehicles by 2025. Given that California is the largest market in electric vehicles, this decision could win more electric vehicles. momentum in other states and beyond.

Related: Does the Chevrolet Blazer EV qualify for a federal tax credit?


The federal tax credit has undergone a significant adjustment following President Joe Biden’s consent to the IRA. For example, instead of being called the plug-in electric motor credit, it was renamed the clean vehicle credit. Eligible individuals can apply for the credit using Form 8936, also known as the Qualified Plug-In Electric Motor Vehicle Credit. The form also applies to plug-in hybrid vehicles with two or three wheels. Additionally, the manufacturer sales cap, which limited Tesla, Toyota and General Motors, has been removed. From January 1, 2023, the three car manufacturers will regain their eligibility for the tax credit. Meanwhile, according to the IRS, electric vehicles and PHEVS, whose final assembly did not take place in North America, become ineligible for the credit and will remain so until the affected automakers move their assembly plants. Those interested in knowing the exact factory build of their favorite models can find out using the VIN decoder provided by NHTSA.


Guidelines for Claiming an EV Credit

People who entered into a binding written contract to buy an electric vehicle before August 16, 2022, but did not take possession of it, can still claim the credit. However, the previous rules apply. This means electric vehicles purchased and not delivered by August 16 will still be eligible for up to $7,500 even if their final assembly took place outside of North America. For those purchasing electric vehicles delivered between August 16, 2022 and December 31, 2022, the rules that existed before the IRA was enacted will apply. This means that although Tesla appears on the new list of eligible electric vehicles, the credit is not available until January 2023, when the manufacturer’s sales cap is lifted. This also extends to Toyota and General Motors.


For people intending to buy a VE Soon, it should be noted that when implementing the IRA, only electric models that had their final assembly in North America are considered eligible. Currently, eligible vehicles include the Rivian R1S and R1T (2022 model year), Lucid Air (2022 model year), Nissan Leaf (2022 and 2023 model years), Mercedes-Benz EQS Sedan (2023 model year), Ford Mustang Mach -E (2022 model year), Ford F-150 Lightning (2022 model year) Audi Q5 (2022 model year) and some others.

Sources: IRS 1, IRS 2, AFDC

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