How Does the Federal Tax Credit for EVs Work?

2024 Blue Chevy Equinox EV

If you have been researching an electric vehicle (EV) to buy in the Raleigh area, you’ve probably heard about the federal incentive. But what is it, and how does the federal tax credit for electric cars work, exactly? The federal tax credit starts at a minimum of $2,500 and can go up to $7,500, depending on the car’s traction battery capacity and gross vehicle weight rating. When you purchase an eligible EV, you may be able to earn this credit, so this is yet another reason why a driver like yourself might opt for an EV. Find out which models qualify for this credit and if you can enjoy this incentive below with the finance team at Hendrick Chevrolet Cary!

Which Models Are Applicable for this Electric Vehicle Tax Credit?

Whenever this electric car tax credit is mentioned, it often sounds like every electric model is applicable. However, that is false. You may be able to earn this credit when you buy a qualified new EV starting in 2023. In addition to the model being new, a qualifying EV also needs to meet the following criteria:

  • Draws propulsion using a traction battery that has at least 7 kilowatt-hours (kWh) of capacity
  • Has a gross vehicle weight rating (GVWR) of up to 14,000 pounds
  • Has to be mostly driven in the United States
  • Undergo final assembly in North America
  • Meet critical mineral and battery component requirements (as of April 18, 2023)

Am I Eligible for the Federal EV Tax Credit?

You’ve checked that the model you want is qualified for this tax credit. Now, you’ll need to see if the credit can be applied to your taxes. First, remember that this tax credit is only available if you buy the vehicle. If you lease an EV instead, the tax credit will go to the lending institution instead as they technically own it.

Once you know you’re set on buying an EV for your Apex drives, you’ll need to consider two factors: whether your household qualifies for the credit and how much you will owe in income tax for that year. The electric car tax credit is only available to::

  • Married couples filing jointly with an adjusted gross income of $300,000 or less
  • Heads of households with an adjusted gross income of $225,000 or less
  • All other filers with an adjusted gross income of $150,000 or less

If you fall into any of those brackets, the next consideration is how much you’ll owe in income tax. This amount is key because it caps how much of the tax credit you can get. For example, if you buy an electric model eligible for the full $7,500 and you owe $3,000 in income tax, then you can only earn $3,000 of the credit. Similarly, say if that model is only eligible for $1,500, then you will earn only $1,500 instead. In other words, you can only earn the full amount if you owe at least $7,500 in income tax the year you bought your EV and the model has an eligible electric car tax credit for $7,500. Keep in mind that you cannot pass on the tax credit to someone else or apply the unused credit to future taxes.

How Long Will the Federal Electric Car Tax Credit Be Available?

The Inflation Reduction Act of 2022 altered the rules for the original Federal electric car tax credit and now has an extended timeline to bring even more value to eco-friendly Holly Springs drivers. This electric car tax credit applies to all vehicles purchased from 2023 through 2032, giving you plenty of time to plan for your next EV.

Save on a Chevrolet EV Today in Cary!

Now that you know the answer to “How does the federal tax credit for electric cars work?” figure out if you’re qualified to claim it! Make sure to check out the new vehicle specials at Hendrick Chevrolet Cary and speak with our finance team to see how else you can save on your EV purchase in Cary. Contact us with any questions, and we’ll be happy to get you into the electric world at a price that you love!



More from Hendrick Chevrolet Cary

  • 2022 Chevy Colorado Towing Capacity

    While the colorado may technically classify as a mid-size pickup, it is by no means underpowered or incapable. In fact, when it comes to the 2022 Chevy Colorado towing capacity, an impressive 7,700 pounds maximum, virtually all of your towing needs can be met with ease! Holly Springs drivers who select the Colorado will no doubt…

  • 2022 Chevrolet Silverado 1500 Trim Levels

    If you’re in the market for a reliable pickup truck, no other truck has you covered quite like the 2022 Chevrolet Silverado 1500. Want to have the Chevy Silverado trim levels explained? We have you covered with this guide to the latest Chevy Silverado models, so you can decide which Silverado pickup truck is better…

  • What is the 2022 Chevy Equinox Towing Capacity?

    The Chevy Equinox interior provides an abundance of space and features to support daily travels in Raleigh, but before you bring a new Equinox home with you, there may be other questions on your mind. Like, “Can a Chevy Equinox tow?” Given the small footprint that makes the 2022 Equinox agile and fun to drive,…

Hendrick Vehicle Disclaimer:

$749.00 Dealer Administrative Fee not included in advertised price. All prices exclude all taxes, tag, title, registration fees and government fees. Out of state buyers are responsible for all taxes and government fees and title/registration fees in the state where the vehicle will be registered.

All prices include all manufacturer to dealer incentives, which the dealer retains unless otherwise specifically provided. Dealer not responsible for errors and omissions; all offers subject to change without notice; please confirm listings with dealer.

All vehicles may not be physically located at this dealership but may be available for delivery through this location. Transportation charges may apply. Please contact the dealership for more specific information. All vehicles are subject to prior sale.


Additional Disclaimers:

*For trade offer, customer must present appraisal form from other dealer or third party upon arrival. For discount offer, customer must provide proof of worksheet or bill of sale from other dealer, for an identically equipped make, model, and trim level upon arrival. For APR offer, customer must provide approval letter from bank. Offer applies to NEW In-stock Vehicles only. Offer expires 4/30/24. Customer may choose ONE of the available offers: trade value, APR, or discount. These cannot be combined. See dealer for complete details.

*Offer applies to Select New Silverado models. Example Stock Unit #Q54861. See dealer for complete details. Must take delivery by 4/30/24.

Connect With Us

Hendrick Chevrolet Cary 35.7401, -78.8081.