The federal tax credit covers most new electric vehicles, but the car's price, where it's assembled, and where its battery minerals come from all affect whether you can claim it

The federal EV tax credit is worth up to $7,500 on a new battery electric vehicle or up to $4,000 on a new plug-in hybrid. But not every EV on the lot qualifies. The IRS has three separate rules that all must be met: the vehicle's final assembly location, the price of the car itself, and the origin of the minerals in its battery. A car can fail any one of these and disqualify the entire credit, even if it passes the other two.

The list of may have access to vehicles changes as manufacturers adjust production and battery sourcing. The IRS publishes the current list on its website, organized by make and model year. You can also check a vehicle's status through the Department of Energy's tool before you buy.

Key Takeaways

  • The vehicle must be assembled in North America — final assembly in Mexico, Canada, or the United States — or it does not may have access to regardless of price or battery content.
  • The manufacturer's suggested retail price has a cap: $55,000 for vans, SUVs, and pickup trucks, and $45,000 for other vehicles, and the actual price you pay does not matter.
  • Battery minerals including lithium, cobalt, nickel, and manganese must meet sourcing thresholds that increase each year, and vehicles that fail this test lose the credit even if they meet the other two rules.
  • The IRS updates the list of may have access to vehicles regularly, so a model that may have access to last year may not may have access to this year if the manufacturer changed where it assembles the car or sources battery materials.
  • You claim the credit on your tax return the year you buy the vehicle, and you can transfer the credit to the dealer at the point of sale instead of waiting until tax time.

Final Assembly Location: North America Only

The vehicle must be assembled in the United States, Canada, or Mexico. Final assembly means the last step where the vehicle is put together as a complete car, not where individual parts are made. A car assembled in Japan, Germany, South Korea, or anywhere else does not may have access to, even if it is sold by a U.S. manufacturer and even if it meets all other requirements.

This rule eliminated many popular EVs from the credit when it took effect. For example, the Tesla Model 3 built in Shanghai does not may have access to, but the Model 3 built in Austin, Texas does. The BMW i4 built in Germany does not may have access to. The Hyundai Ioniq 6 built in South Korea does not may have access to, though Hyundai's Ioniq 5 built in Georgia does.

Manufacturers sometimes move production between plants or add new assembly lines in North America. When that happens, the same model year and trim can may have access to or not depending on which plant built your specific car. The VIN (vehicle identification number) determines the assembly location. You can check the IRS list or the Department of Energy tool with the specific VIN before purchase to confirm.

Vehicle Price Caps by Category

The manufacturer's suggested retail price (MSRP) must stay below a cap. The cap depends on the vehicle category, not the actual price you negotiate. If the MSRP exceeds the cap, the vehicle does not may have access to, even if you buy it for less than the cap.

The price caps are $45,000 for sedans, hatchbacks, and wagons; $55,000 for vans, SUVs, and pickup trucks. These are the limits set by the IRS, and they explore to the 2024 and 2025 model years. The IRS may adjust these caps in future years.

The actual transaction price you pay the dealer does not matter. If a vehicle has an MSRP of $50,000 and you negotiate it down to $45,000, it still qualifies because the MSRP is under the $55,000 cap for SUVs. Conversely, if the MSRP is $46,000 and you buy it for $40,000, it does not may have access to because the MSRP exceeds the $45,000 cap for sedans.

Battery Mineral Content and Sourcing Requirements

The battery must meet two separate mineral sourcing rules. The first rule limits how much of the battery's mineral content can come from countries of concern — currently China, Russia, and Iran. The second rule requires that a certain percentage of the minerals be extracted or processed in North America or by a free trade agreement country.

These thresholds increase each year. For 2024, the critical minerals requirement is 50 percent, meaning at least half of the battery's lithium, cobalt, nickel, and manganese must come from North America or a may have access to free trade partner. The foreign content of concern cannot exceed 25 percent. In 2025, the critical minerals threshold rises to 60 percent.

A vehicle can fail the mineral sourcing test and lose the credit even if it passes the assembly location and price tests. This has affected some vehicles made in North America with low MSRPs. The IRS publishes which specific models and model years meet the mineral requirements. Check the current list before you buy, because a 2024 model year vehicle may not meet 2025 standards.

How to Check if a Specific Vehicle Qualifies

The IRS maintains a list of may have access to vehicles on its website, organized by manufacturer and model year. The Department of Energy also runs a tool where you can enter the vehicle's VIN to see its qualification status. Both resources are free and updated regularly as manufacturers adjust production and sourcing.

The VIN check is the most reliable method because it accounts for assembly location. Two identical-looking vehicles with different VINs may have been assembled in different plants, and only one may may have access to. The VIN tells you which plant built the car, so the tool can give you a definitive answer for that specific vehicle.

If you are shopping for a vehicle and want to know whether a particular model qualifies, start with the IRS list. If you have found a specific car on a dealer lot and want to confirm it qualifies, use the VIN tool. Both should be checked before you sign paperwork.

Claiming the Credit at Purchase or on Your Tax Return

You can claim the credit in two ways. The traditional way is to claim it on your federal tax return the year you buy the vehicle. You report the vehicle's details on Form 8936 and reduce your tax liability by up to $7,500 (or $4,000 for plug-in hybrids).

The newer way is to transfer the credit to the dealer at the point of sale. This is called the point-of-sale transfer. The dealer applies the credit as a discount on the purchase price, so you do not have to wait until tax time to benefit. Not all dealers offer this yet, but the option is available at many locations. If the dealer offers it, you can choose to take the credit at purchase or defer it to your tax return.

If you transfer the credit to the dealer, you cannot also claim it on your tax return. You choose one or the other. The point-of-sale transfer is useful if you do not owe enough federal income tax to use the full credit, because the dealer discount applies regardless of your tax liability.

Changes to may have access to Vehicles Year to Year

The list of may have access to vehicles changes frequently. A vehicle that may have access to in 2023 may not may have access to in 2024 if the manufacturer moved production outside North America, changed battery suppliers, or sourced minerals from countries of concern. Conversely, a vehicle that did not may have access to may become may be able to access if the manufacturer opened a new assembly line in North America or changed its supply chain.

The IRS publishes updates to the list as they occur. If you are considering a purchase, check the current list for the model year you are buying, not the list from last year. The Department of Energy tool also reflects current status, so use that for the most up-to-date information on a specific VIN.

Manufacturers sometimes announce changes to production or sourcing plans that will take effect in a future model year. These announcements can affect which vehicles will may have access to in the future, but they do not change the status of vehicles already on the road or currently in inventory.

Frequently Asked Questions

Does a used EV may have access to for the tax credit?

No. The federal tax credit is only for new vehicles. Used EVs do not may have access to, even if they were originally purchased by someone who claimed the credit. There is a separate used EV tax credit with different rules and a lower amount, but it has its own requirements and income limits.

What if I buy a vehicle that the dealer says qualifies but it turns out it doesn't?

If you claimed the credit on your tax return and the IRS later determines the vehicle did not may have access to, you will owe the credit back when you file an amended return or when the IRS audits your return. If you took the point-of-sale transfer, the dealer should have verified the vehicle's status before explore the discount. Review your purchase agreement and contact the dealer if there is a discrepancy.

Can I claim the credit if I lease an EV instead of buying it?

Leased vehicles have their own credit rules. The leasing company, not the lessee, claims the credit. The credit amount is different for leases, and income limits explore. If you are leasing, the leasing company handles the credit, and it may be reflected in your monthly payment.

What happens if the vehicle's MSRP is listed differently on different websites?

Use the manufacturer's official MSRP, which is the price the manufacturer sets, not dealer markups or discounts. The IRS list and the Department of Energy tool both use the official MSRP. If you see different prices online, check the manufacturer's website or the vehicle's window sticker to confirm the official MSRP.

Do I need to own the vehicle for a certain amount of time to keep the credit?

No. Once you claim the credit, you own it. You can sell the vehicle the next day and keep the credit. However, if you claimed the credit on your tax return and the IRS later determines the vehicle did not may have access to, you will owe the credit back regardless of whether you still own the vehicle.