The electric car tax credit has changed, and that means all the eligibility criteria have changed with it. While still worth up to $7,500, the Inflation Reduction Act means that the majority of electric cars no longer qualify.
In fact just nine fully-electric vehicles do, and two of them are commercial vans you're not likely to want. There are other financial incentives available at state and local levels, but the federal credit is still the main way to save money on a brand new electric car.
So if you’re on the lookout for a new electric car, and want to be able reclaim some of the listed price, here are the electric cars that are still eligible for the $7,500 federal tax credit.
The Nissan Leaf is the least expensive EV currently on sale in the United States, with prices starting at just $27,400. Throw in the tax credit and that price can drop a lot lower, as low as $19,900 if you’re eligible for the full $7,500 credit. In our Nissan Leaf review, we noted that this particular EV is fantastic value for money — one of the reasons it's on our list of the best electric cars.
There's a pretty good selection of features and power in this budget offering too. In its cheapest form the Nissan Leaf offers 149 miles of range, 50 kW rapid charging, 148 horsepower, an 89 MPH top speed. The pricier 62 kWh model also offers 226 miles of range, 99 MPH top speed, 215 horsepower and 100 KW rapid charging. Both models have 15.4 cubic feet of trunk space, but folding down the rear seats and utilizing the passenger seat pushes the total up to 116 cubic feet.
Ford Mustang Mach-E
Ford's first (and currently only) EV on sale really knocked the ball out of the park. Prices for this car start at $43,895, the 0-60 time is 3.5 seconds and you can get up to 314 miles of range — a stark improvement since we posted our Ford Mustang Mach-E review. It doesn't take a genius to realize that the Mach-E has something for everyone. Even if it isn't a Mustang in the traditional sense.
Also along for the ride is Ford's Pro Pilot 360 2.0 driver assistance package. That has all the usual features like blind spot warning, lane keeping, adaptive cruise control and more. BlueCruise, the autonomous driving system, is also one of the few that lets you take your hands off the wheel for certain periods of time.
The 15.5-inch portrait touchscreen even features personalization features, thanks to cloud connectivity. Plus it has buttons and a dial, rather than focusing on touchscreen controls like all too many other electric cars.
Mercedes Benz EQS
The current flagship in Mercedes' electric car line-up is a pricey choice, but the $102,310 starting price doesn't have to sting so much thanks to the federal tax credit. That hefty price tag can be justified by all the things the electric S-Class has to offer too.
The EQS can take you up to 350 miles on a single charge — one of the longest EV ranges — a 0-60 time of 4.1 to 5.9 seconds alongside 22-63 cubic feet of cargo space. That's SUV-rivaling amounts of space in a sedan, and shows just how spacious this car actually is.
Inside you get all the luxuries of Mercedes, with plenty of room to get comfortable, and an optional Hyperscreen that features three separate touchscreens under a single pane of glass. On top of that you get 200kW rapid charging, which can take you from 10 to 80% in 31 minutes, and Mercedes' active lane-keeping autonomous driving system.
The main downside is that the EQS may not be eligible for the tax credit for long. The credit could impose a price cap as early as January 1, which will limit eligibility to electric cars under $55,000. Almost half what you'd pay for the cheapest EQS.
The electric truck space is on the verge of blowing up, and Rivian managed to make it to market just in time. While not the first all-electric truck on the roads, it’s the only one that is eligible for the federal tax credit. That means the $73,000 starting price could end up as low as $65,500.
For that money you’re getting a quad-motor AWD, 314 mile EPA range estimate, Driver+ autonomous driving assistance, Alexa support, a built-in tire compressor, a 15.6-inch infotainment display and 12.3-inch digital gauge cluster, plus so many more cool little features hiding away. The truck even has a towing limit of 11,000 pounds, and an incredible 3-second 0-60 time.
But adding extras onto the R1t can push the price up, and past the upcoming $80K price cap on electric trucks. So keep it cheap, or get your orders in as soon as you can.
Ford F-150 Lightning
The Ford F-150 Lightning is the latest addition to Ford's ever-popular F-Series. Fortunately electrifying the best-selling vehicle in U.S. history is a bet that paid off, with our Ford F-150 Lightning review declaring this to be the best pickup on the road. And there's been so much demand that Ford had to stop taking orders. Thankfully they're open again, and the truck is still eligible for the federal tax credit.
So what do you get? Up to 320 miles of range, a 0-60 time in the mid-four second range, the BlueCruise semi-autonomous driver assistance system, smart hitch assist technology, and the ability to turn your car into a mobile generator. Whether you need to charge gadgets, other cars, or even power your home, the F-150 Lighting can provide you with the power.
There are other electric trucks on the way, all of which sound incredibly impressive, but Ford has already set the bar so high. And one of these trucks can be yours for as little as $39,474 thanks to the EV tax credit.
The Lucid Air seems to want to beat Tesla at its own game, with range up to 516 miles of range and a top 0-60 time under two seconds. The specifics all depend on which model you buy, but needless to say each Lucid Air is designed to offer luxury, range and performance all rolled into one.
This car can recharge at up to 300 kW speeds, has a top speed between 168 and 200 miles per hour, and an advanced autonomous driver assistance system that promises to improve with over-the-air upgrades. The only real downside is the price, with costs ranging from $87,400 all the way up to an eye-watering $249,000.
Sadly that also means this car won't be eligible for the federal tax credit for much longer — so get your orders in while you can.
Starting at $78,000, the Rivian R1S is the R1T truck's sportier cousin. The S stands for SUV, in case you didn't know, and that market is already plenty competitive, so Rivian will need to wow people to get them on board.
But the R1S has almost as much as the R1T, packing in up to four electric motors, over 320 miles of estimated range, a 0-60 time of 3 seconds and up to 7,700 lbs of towing potential. There's also the same Driver+ autonomous driver assistance, built-in 4G and Wi-Fi, and room for up to seven passengers — or up to 104 cubic feet of storage. It's all up to you.
The problem right now is that the R1S may not be eligible for much longer. It all depends on whether the car is classed as a truck, or if the lack of a truck bed means it's officially classified as a car — complete with the smaller $55K price cap.
What is the EV federal tax credit and how does it work?
The EV tax credit has undergone some changes recently, thanks to the newly-enacted Inflation Reduction Act. That means the credit's eligibility criteria has got a lot stricter since August 16, and it's limited the number of cars that can offer it.
The principles of the credit are still the same. Anyone who purchases an eligible plug-in electric vehicle will be able to claim a tax credit worth up to $7.500. This applies to both electric cars and plug-in hybrids, and the total amount depends on how much range and battery capacity the car has to offer.
Claiming the credit requires form 8936, the Qualified Plug-in Electric Drive Motor Vehicle Credit. This can be found on the IRS website (opens in new tab) alongside instructions on how to fill it in.
By 2024 certain approved dealers will be able to deduct the value of your tax credit at the point of sale, essentially giving you a discount on the car.
How do cars become eligible for the EV tax credit?
In theory all automakers that sell electrified cars, be they fully-electric or plug-in hybrids, can sell cars eligible for the EV tax credit. However, Post Inflation Reduction Act, the criteria is a lot stricter than it used to be and will only get stricter as the years go by.
Right now only cars that have final assembly in North America are eligible for the EV tax credit. The new rules will also be lifting the 200,000 unit sales cap that affects both Tesla, Toyota and General Motors, but not until 1st January 2023. Until then those cars are still as ineligible as they were at before the Inflation Reduction Act was signed.
As it stands only nine fully-electric vehicles and 10 plug-in hybrids, match both those criteria - two of which are vans. A full list is available on the Department of Energy's website (opens in new tab).
Other incoming rules are price caps, limiting tax credit eligibility to electric cars with an MSRP under $55k and electric trucks under $80k. Eligibility will also depend on your own income, with a $150K limit for single tax filers, $225K for heads of households and $300K for joint filers.
Eventually the credit will also be restricted to cars that obtained at least 40% of battery materials in North America or a country with a free-trade agreement. This is expected to start in 2024, and by 2029 100% of battery components will need to be made in North America.
This list of eligible cars will always be in flux, with cars being added or removed based on whatever criteria are in place at any given period.
Next: Check out why it is the worst time to buy a Tesla right now.
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