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f 150 lightning platinum

Ford

Back in 2022, the United States government passed the The Inflation Reduction Act (IRA) — a law which, in spite of its name, was actually primarily concerned with fighting climate change and investing in American infrastructure. As part of those moves, the new law made some critical changes to the $7,500 federal tax credit available for electric vehicles. The law eliminated the 200,000-unit manufacturer cap that saw Tesla and GM EV buyers lose access to the credit prior to the IRA’s arrival — but it also imposed some onerous and confusing restrictions on which vehicles were eligible.

And, as it so happens, those restrictions continue to change with the years as part of the law’s structure. For 2024, the rules concerning the $7,500 tax credit have shifted once again, and the tweaks now mean fewer vehicles are eligible for the full amount. Here’s what you need to know — and which new electric cars, trucks and SUVs are still eligible.

What are the Federal EV Tax Credit changes for 2024?

Point-of-sale rebate: Dealers can offer the federal tax credit to buyers as a point-of-sale rebate, instead of them having to claim it on the following year’s taxes. This will actually lower the monthly payment for buyers.

FEOC: The government implemented a “foreign entities of concern” provision. Essentially, any vehicle sourcing components or critical materials from China, Iran, Russia or North Korea is not eligible for the federal tax credit. This provision eliminated several EVs from the list.

Electric Vehicles That Qualify for the 2024 Federal Tax Credit

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2024 Ford F-150 Lightning






Both standard and long-range versions of the 2024 F-150 Lightning are eligible for the full federal tax credit.

  • Starting Price: $49,995
  • MSRP Limit: $80,000
  • Credit Amount: $7,500

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The Rivian R1S can qualify for a $3,750 federal tax credit. But buyers must select the base Dual-Motor AWD and Standard Pack setup to keep the starting MSRP under $80,000.

  • Starting Price: $78,000
  • MSRP Limit: $80,000
  • Credit Amount: $3,750

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Rivian R1Ts configured with an MSRP below $80,000 are eligible for a $3,750 federal tax credit.

  • Starting Price: $73,000
  • MSRP Limit: $80,000
  • Credit Amount: $3,750

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The Model 3 Performance trim is eligible for the full $7,500 federal tax credit.

  • Starting Price: $40,240
  • MSRP Limit: $55,000
  • Credit Amount: $7,500

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The absolute base Tesla Model X with no options is eligible for the full $7,500 federal tax credit.

  • Starting Price: $79,990
  • MSRP Limit: $80,000
  • Credit Amount: $7,500

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All versions of the Tesla Model Y are eligible for the full $7,500 federal tax credit in 2024.

  • Starting Price: $43,990
  • MSRP Limit: $80,000
  • Credit Amount: $7,500

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What Makes an EV Eligible for the Federal Tax Credit






Critical minerals: Vehicles currently need 40 percent of their critical minerals by value to be extracted, processed or recycled in the United States or a country with a free trade agreement. This makes the vehicle eligible for a $3,750 credit. That threshold will increase to 80 percent by 2026.

Battery components: Vehicles must have 50 percent of the battery components made in North America. This makes the vehicle eligible for an additional $3,750 credit. That threshold will increase to 90 percent by 2028.

Price Limits: Congress set MSRP limits for vehicles eligible for the credit. To be eligible, the MSRP must be below $55,000 for cars and $80,000 for trucks, SUVs and vans.

Income Limits: The federal EV tax credit is now limited by income. Buyers must earn an adjusted gross income less than $150,000 annually or $300,000 for a married couple to receive the federal tax credit.

Non-refundable: Remember that the federal EV tax credit is non-refundable. It can offset the money you owe to the government, but it can not add to your refund.

Leasing an EV may be a better option






Leasing can be a way to work around the requirements for receiving a $7,500 federal tax credit. Basically, a lease is considered a commercial vehicle purchase by the leasing company. Commercial purchases face far fewer eligibility requirements for the vehicle to receive the $7,500 tax credit. The company offering the lease can (but is not obligated to) extend the amount of that credit to the customer to offset the cost of a lease. The income level of the customer and his or her tax refund status don’t come into play.

Some plug-in hybrids are also eligible for the Federal EV Tax Credit






Five plug-in hybrids are currently eligible to receive a federal tax credit. The Chrysler Pacifica PHEV can receive a full $7,500. The Lincoln Corsair PHEV, Ford Escape PHEV, Jeep Grand Cherokee 4xe and Jeep Wrangler 4xe PHEVs can receive a $3,750 credit.

Other EVs and PHEVs may become eligible later in 2024






Of course, it wouldn’t be a government program if there weren’t some bureaucratic issues still working their way through the system. In this case, several other automakers were reportedly still submitting their documents to the feds after the December 18th, 2023 deadline set by the Treasury Department.

A January 1st report from Reuters states that General Motors expects that the Cadillac Lyriq and Chevrolet Blazer EV will be eligible for the tax credit again in early 2024, after recertifying updates to two minor parts that kept the vehicles from getting the federal cash. The Chevy Equinox EV and Silverado EV, GMC Sierra EV and Cadillac Optiq are also expected to be eligible for the full $7,500 credit when they go on sale later in 2024.

Likewise, Volkswagen also stated that “we are optimistic that 2023 ID.4s and all 2024 ID.4s will be eligible under the new rules,” according to the same Reuters report.

Assuming all goes according to plan, these other automakers’ EVs should become eligible later on this year. We’ll be sure to update this list as new data becomes available, so watch this space.

Future Vehicles We’re Excited to Drive…






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