Does the Hyundai Kona Qualify for a Tax Credit?

Electric vehicle (EV) tax credits can significantly reduce the cost of purchasing a new car, making them an important factor for buyers considering models like the Hyundai Kona. However, not all EVs qualify due to federal and state requirements.

Determining whether the Hyundai Kona qualifies depends on manufacturing location, battery specifications, and income limits. Some states also offer additional incentives that can further lower the price.

Federal EV Tax Credit Eligibility

The federal EV tax credit, established under the Inflation Reduction Act (IRA) of 2022, introduced stricter rules. A key requirement is that the vehicle must be assembled in North America, which excludes many foreign-made models.

Battery component and mineral sourcing also impact eligibility. In 2024, at least 50% of battery components must be manufactured or assembled in North America, and 40% of critical minerals must come from the U.S. or a country with a free trade agreement. These percentages increase annually, making compliance more challenging for automakers.

The maximum credit is $7,500, split into two parts: $3,750 for meeting battery component requirements and another $3,750 for critical mineral sourcing. If a vehicle meets only one of these conditions, it qualifies for a partial credit. The IRS maintains a list of eligible models, updated as manufacturers adjust to meet evolving standards.

Battery and Range Criteria

The Hyundai Kona Electric comes in two battery configurations: a 48.6 kWh battery in the standard model and a 64.8 kWh battery in the long-range version. The larger battery provides an estimated 261 miles per charge, while the standard version offers around 197 miles. These estimates vary based on driving conditions, temperature, and climate control usage.

Range is a key consideration for buyers. The Kona Electric’s range is competitive within the subcompact EV segment but falls short of longer-range options like the Tesla Model Y or Chevrolet Equinox EV. While suitable for city driving and moderate highway use, frequent long-distance travelers may need to plan for additional charging stops.

Charging speed also affects convenience. The Kona Electric supports DC fast charging, allowing the larger battery to charge from 10% to 80% in about 43 minutes under optimal conditions. A Level 2 home charger takes around nine hours for a full charge, making overnight charging practical. These times align with industry standards, though some newer models offer faster charging.

Income Qualification Details

The federal EV tax credit also depends on the buyer’s income. The IRA introduced income limits to ensure the credit benefits middle-class consumers. These limits are based on Modified Adjusted Gross Income (MAGI), which includes wages, dividends, rental income, and other taxable earnings, with adjustments for deductions like student loan interest.

Single filers must have a MAGI below $150,000, married couples filing jointly must stay under $300,000, and heads of households have a limit of $225,000. If income exceeds these thresholds in either the year of purchase or the prior year, the credit cannot be claimed. Buyers can use the lower of the two years, which helps those with fluctuating income.

The tax credit is non-refundable, meaning it only offsets taxes owed. For example, if a buyer qualifies for the full $7,500 credit but owes only $5,000 in federal taxes, the remaining $2,500 is forfeited. Unused portions cannot be carried forward to future tax years. However, starting in 2024, buyers can transfer the credit to the dealer at the point of sale, reducing the vehicle’s price upfront instead of waiting to claim it on a tax return.

State and Local Incentives

State and local programs can further reduce the cost of a Hyundai Kona Electric. These incentives vary by location, with some states offering direct rebates at the time of purchase and others providing tax credits, reduced registration fees, or exemptions from emissions testing.

California’s Clean Vehicle Rebate Project (CVRP) offers up to $2,000 for qualifying EV buyers, though income restrictions apply. New York’s Drive Clean Rebate provides up to $2,000, applied directly at the dealership to lower the purchase price.

Colorado offers one of the most generous tax credits, providing up to $5,000 for eligible new EVs. New Jersey exempts EVs from state sales tax, which can save buyers thousands depending on the vehicle’s price. Some states, like Oregon and Connecticut, have layered incentives where both state and local utility companies offer purchase rebates, further reducing costs.