Federal EV Tax Credit and State Incentives
The Inflation Reduction Act (IRA) provides federal tax credits of up to $7,500 for qualifying new electric vehicles. To qualify, cars must have an MSRP under $55,000 and SUVs/trucks under $80,000. Buyer income limits also apply: $150,000 for single filers, $300,000 for joint filers.
Many states offer additional EV rebates or credits on top of the federal credit. California's CVRP provides up to $7,500, Colorado offers a $5,000 state credit, and New Jersey offers a $4,000 rebate. These can be stacked with the federal credit for maximum savings.
Note that the federal tax credit is nonrefundable — you must have enough federal tax liability to use it. Starting in 2024, you can transfer the credit to dealers as point-of-sale discounts under the IRA. State rebates vary in eligibility — check your state's EV incentive program for current details.
Frequently Asked Questions
Up to $7,500 under the IRA for qualifying new EVs. The vehicle must meet MSRP caps and final assembly requirements, and the buyer must meet income limits to qualify.
Yes. The federal tax credit and state rebates/credits are separate programs. In California, for example, you can combine the federal $7,500 credit with the CVRP rebate of up to $7,500 for significant total savings.
Yes, since January 2024 under the IRA, you can transfer the tax credit to the dealer and receive it as an instant discount at the time of purchase, regardless of your tax liability.