Who is eligible for US federal EV tax credits in 2023?

In 2023, the US federal tax credits apply to multiple buyer circumstances, but what exactly can EV owners gain and how do they know they are eligible?

Despite the lead times and range factors of electric vehicles (EVs), the cost of zero-emission vehicles (ZEVs) is one of the main factors in allowing more consumers and businesses to get on board. 

Many of the new cars we see today are unaffordable and it should also be considered that a lot of drivers still trade or buy their vehicles from the secondhand market. 

The Internal Revenue Service (IRS) recognises the need to support lower earning households that could make the switch to all-electric vehicles if they were affordable—as even some of the smallest, most ‘affordable’ cars still cost a lot more than consumers would expect to pay anyway. 

Realising this, the IRS EV tax credit scheme looks to balance this out by ensuring that households of certain incomes receive financial benefits for vehicles below particular prices. 

The IRS qualifies these vehicles based on a set of criteria to ensure that potential EV drivers can receive tax credits of US$7,500 while ensuring an equitable transition with OEMS. 

A qualified EV purchased in North America in 2023 and beyond will meet the following: 

  • The battery capacity will be a minimum of 7 kilowatt hours—excluding vehicles like the agile city car, the Citroen Ami
  • Have a gross weight rating less that 14,000 pounds (seven tonnes)
  • Manufactured by a qualified OEM, of which the IRS provides an index of these
  • The car must be assembled in North America
  • The vehicle must be bought for the purchase price
  • The seller must report the buyer’s name and taxpayer identification to the IRS at the time of the sale

Can I receive EV tax credits as a consumer? 

If you’re purchasing an EV at the lower end of the price bracket, then yes, households earning a certain amount or lower can receive tax allowances for buying a car valued at no more than US$55,000 or a vans, SUV, or pick up truck at a value of US$80,000.

Married couples filing jointly for EV tax credits must not have a modified adjusted gross income (MAGI) of more than US$300,000. For heads of households this is lower at US$225,000, and anyone else filing for tax credits can be no more than US$150,000.

What this means is that anyone with higher expenses, such as IRA contributions and outstanding student finance, is likely to receive more support in gaining tax credits for switching their vehicle to a new electric one. 

What tax benefits are available to commercial EV buyers? 

Businesses are also available to claim benefits for making the shift to EVs. The US Department of Energy sets this out, explaining what organisations can receive for buying commercial EVs and fuel-cell electric vehicles (FCEVs) in 2023. 

Vehicles with a gross weight of 14,000 (seven tonnes) must adhere to the similar consumer purchase rule and have at least a 7 kWh battery, whereas anything above this must exceed 15 kWh. 

As a result, commercial buyers can receive: 

  • Up to 15% of a plug-in hybrid vehicle’s purchase price
  • 30% of a battery-electric vehicle or FCEV price
  • The incremental cost of the vehicle compared to its ICE equivalent

The maximum that one can receive for a vehicle seven tonnes or below is US$7,500 while anything larger could receive benefits of up to US$40,0000.

To find out more about the current EV tax breaks in the US or apply, the IRA website provides more information on what buyers could receive based on their circumstances.