EV tax credits just changed again: Here’s where you can still get discounts

The Internal Revenue Service updated the rules for electric vehicle tax credits again starting with the first day of 2024. The bad news is that fewer vehicles are now eligible for tax credits and even fewer are eligible for the maximum $7,500.

The Internal Revenue Service updated the rules for electric vehicle tax credits again starting with the first day of 2024, bringing some good and bad news. The bad news is that fewer vehicles are now eligible for federal tax credits, and even fewer are eligible for the maximum $7,500 credit. But there’s good news, too. Many electric and plug-in hybrid models are still eligible for at least a portion of the full tax credit. Also, consumers can now get the tax credit applied to the purchase price of the vehicle at the time they buy it, rather than having to wait until they file their taxes. And, as before, if you lease, rather than purchase the vehicle, you can still enjoy the benefit of the tax credit even on vehicles that would not otherwise qualify. Many states and even municipalities also offer their own incentives for electric vehicles and for the installation of home EV chargers. These IRS changes don’t impact those incentives. Even with electric vehicles being heavily discounted, as most currently are, in some cases tax credits are the only way to get any sort of incentive on an EV, said Ronald Montoya, consumer advice editor at Edmunds.com. Tesla, for example, does not negotiate on the sticker price. “If you look at Tesla, which is one of the most popular EVs, it doesn’t [give] any discounts, so the tax credit is very important for Tesla buyers,” he said. “So it just depends on the vehicle. But I think overall, they are a big incentive for people.”