Skip to main content
  1. Home
  2. Auto

Fewer EVs qualify for the $7,500 EV tax credit in 2024

Your EV tax break is going away

James Dolan
By
Electric car plugged into charger
IvanRadic / Openverse

In August 2022, President Joe Biden signed the Inflation Reduction Act into law and repealed the previous electric vehicle tax credit that had been in effect since 2010. Unlike the previous guidelines, in which any EV could qualify for a tax credit of up to $7,500 as long as the manufacturer hadn’t sold over 200k EVs, the Inflation Reduction Act only favored electric vehicles made in America with no limit on the manufacturer sales. As a result, major automakers such as Tesla and GM made it back on the list after they were locked out in the old rules for surpassing the 200k sales.

However, electric vehicles that are made in North America are required to meet specific requirements to qualify for the federal EV tax credit. More succinctly, the federal government imposed a price cap limit and a certain percentage on the battery components and critical minerals that are used to manufacture electric vehicles. But that’s not all; the requirements get higher every year, which means fewer EVs will qualify for the $7,500 federal tax credit in 2024 than in 2023. Why is it so? 

3d rendering group of electric cars with pack of battery cells module on platform in a row
phonlamaiphoto / Adobe Stock

A higher percentage of materials must be produced in North America for EVs to qualify

In 2022 and 2023, the EVs that qualified for the $7,500 federal tax credit were required to have 40 percent of the “critical minerals” and 50 percent of the battery components manufactured in North America — according to the U.S. Department of Treasury. But as soon as the clock hit 1st January 2024, the criteria to qualify for the $7,500 federal tax credit changed to 50 percent of critical minerals and 60 percent of battery components. Because of that, fewer EVs qualify for the $7,500 federal tax credit in 2024 than last year.

Recommended Videos

However, the new rules are only applicable to electric vehicles coming out of the production plant in 2024. This means that you could still claim the EV federal tax credit under the previous criteria if you registered your new electric vehicle before 1st January 2024. At the moment, only four 2024 EV models, which include the Tesla Model Y, Model 3, Model X, and F-150 Lightning, qualify for the full $7,500 federal tax credit. But if you were buying a new electric vehicle last year, you had an option of 14 electric cars that qualified for the full federal tax credit.

Related

Of course, we expect more electric cars to be eligible for the $7,500 tax credit over the next few months as more automakers adjust to the new rules. But if you want an EV that is yet to qualify and you want to save money, you should consider leasing an electric car instead. In fact, if you’re leasing an EV, it could be eligible for the full tax credit without a price limit. The government is also providing subsidies to support the charging infrastructure and encourage more people to buy EVs. 

Editors' Recommendations

Topics
James Dolan
James Dolan
Contributor
James Dolan is an automotive writer with extensive work experience having been published on The Drive, Hot Cars, Green…
We drove the Maserati Grecale Folgore — what we liked (and didn’t) about the EV
We get hands on with Maserati's electric SUV
Maserati Grecale Folgore

Maserati has unveiled its latest step towards electrification in the form of the Maserati Grecale Folgore -- a BEV version of its mid-sized luxury SUV. The vehicle is all part of The Trident’s ambitious plan to provide an electric option in all of its vehicles by 2025, and fully electrify its lineup by 2030.

So at Maserati’s invitation, I ventured out into the heel of Italy’s boot to try out the Trident’s new electric SUV. The Italian EV got a workout on highways, narrow European city streets, and those windy coastal roads where the scenery is beautiful enough to sap away at your concentration.

Read more
2025 Mercedes Benz EQG: Everything we know about the electric G Wagon
Get ready for a G-Class EV
Rendering of side profile of Mercedes-Benz EQG in front of blue skies.

Over the past few years, Mercedes-Benz has unveiled electric vehicle models such as the EQS, EQB, and EQE models. As is tradition, you also have the option to choose Mercedes-Maybach and AMG electric models to suit your taste. The AMG EQE SUV starts at $109,300, while the Mercedes-Maybach EQS SUV will cost you around $200,000.

However, the all-electric G Wagon, dubbed the EQG, is missing from the action. The last time we caught a glimpse of it was back in 2021 as a concept car. Well, it’s expected to be produced later this year, and Mercedes-Benz teased it at the 2024 CES technology show in Las Vegas. Here is what you can expect.

Read more
IIHS has raised its standards for crash test safety — these are the safest cars for 2024
Higher standards to Top Safety Pick awards by IIHS
Tesla Model Y rear end angle from passenger side parked in front of mountains.

Roundabout Signs The Manual

In case you haven't noticed, cars and trucks have become significantly more advanced over the last few years, and most of those advancements have thankfully come in the name of safety. It wasn't that long ago that having antilock brakes and airbags was a significant breakthrough in modern tech. But now, with everything from pedestrian detection to automated emergency braking to adaptive cruise control, cars have never been safer.

Read more