In 2024, the federal EV tax credit undergoes changes, presenting both advantages and challenges for buyers. The Biden administration introduces an instant rebate, allowing immediate access to the $7,500 credit at the point of purchase. Despite income cap requirements—$300,000 for couples, $225,000 for heads of households, and $150,000 for others—the removal of the tax liability minimum benefits those with no tax liability. However, eligibility demands that qualifying EVs be assembled in North America, with an MSRP below $55,000 for cars and $80,000 for SUVs and trucks.

The number of EVs qualifying for the tax credit is decreasing due to the new guidelines for their batteries. Batteries with materials defined as a “foreign entity of concern” (FEOC) will no longer meet the guidelines for tax credits. This is to ensure that EV car parts are American made.

An additional 30% tax credit for used EVs, capped at $4,000, targets model year 2022 or earlier vehicles, with an income cap of $150,000 and a $25,000 price limit. Business owners can explore a commercial tax credit for EVs, offering up to $7,500 for light vehicles and $40,000 for larger ones, featuring fewer restrictions than the clean vehicle tax credit. These changes signify a dynamic landscape, reflecting the administration’s commitment to domestic EV industry growth, supply chain security, and job creation.

Click here to read the full article, originally published January 2, 2024, by NPR.