How the EV Tax Credit Works

The $7,500 EV federal tax credit can be complicated for buyers and manufacturers. Here's what you should know.

picture of a transparent piggy bank with an EV inside made of grass sitting on top of dirt
(Image credit: Getty Images)

A federal EV tax credit is here, thanks to the Inflation Reduction Act (IRA) — massive tax and climate legislation promoting clean energy. The credit of up to $7,500 for certain electric vehicles, called “clean vehicles,” is supposed to encourage more people to use EVs. However, there are many questions about how the EV tax credit works.

  • Some buyers wonder if they can claim the credit because of income limits. (More on that later.)
  • Update: On May 3, 2024, the Treasury and the IRS unveiled final rules for the federal electric vehicle tax credit, a key step in the Biden administration’s plan to accelerate the adoption of electric vehicles (EVs). Some see the regulations as a balance between incentivizing EV adoption and safeguarding against perceived threats from Chinese imports. 
  • However, due to ongoing changes in the past year to EV tax credit rules, there have been questions about which electric vehicles qualify for the full tax credit for the 2023 tax year (tax returns just filed) and 2024 (taxes filed in early 2025).

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SINGLEModified AGI over $150,000Don't qualify for the EV credit
MARRIED (Filing Jointly)Modified AGI over $300,000Don't qualify for the EV credit
HEAD OF HOUSEHOLDModified AGI over $225,000Don't qualify for the EV credit
ALL OTHER FILERSModified AGI over $150,000Don't qualify for the EV credit
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$112,500HEAD OF HOUSEHOLDRow 1 - Cell 2

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Kelley R. Taylor
Senior Tax Editor,

As the senior tax editor at, Kelley R. Taylor simplifies federal and state tax information, news, and developments to help empower readers. Kelley has over two decades of experience advising on and covering education, law, finance, and tax as a corporate attorney and business journalist.