The IRS has made it a bit easier for EVs to qualify for tax credits in 2025. In the meantime, here's what you need to know about which cars are eligible right now.A $7,500 tax credit for electric vehicles has seen substantial changes in 2024. It should be easier to get because it's now available as an instant rebate at dealerships, but fewer models qualify.A $7,500 tax credit for electric vehicles has seen substantial changes in 2024.
"It's definitely confusing," says Alison Flores, a manager with the Tax Institute at H&R Block."Let's say you're single. Your salary is $160,000 a year. You may say, 'Oh, I don't qualify because I'm over $150,000,'" she says.Fewer EV models qualify for the tax credit this year as requirements imposed by the government get stricter. Some versions of the Tesla Model 3, for instance, no longer qualify.
And if you take the credit as a rebate, you don't need to calculate your taxes in advance to be confident in the amount you'll get. The $7,500 tax credit is actually two separate credits, each worth $3,750. Vehicles can qualify for both, one or neither. The other $3,750 credit is about battery manufacturing: A certain percentage of the battery's components, like anodes, cathodes and electrolytes, need to be manufactured or assembled in North America.
Vehicles that are leased to consumers are eligible for a version of the tax credit that is much easier to qualify for. It has no requirement that vehicles be made in America, no price cap for vehicles and no income caps. So if you want to lease a Kia EV6 from South Korea or a six-figure luxury sedan? Go to town.