How Do You Get the Federal EV Tax Credit?

The federal government provides the Clean Vehicle Credit, a tax incentive designed to encourage the adoption of electric vehicles (EVs). This program makes qualifying new and used clean vehicles more affordable by offering a significant reduction in federal tax liability. The credit is part of a broader initiative to promote cleaner energy and reduce emissions. The rules involve requirements for the buyer, the vehicle, and the transaction itself.

Determining Your Personal Eligibility

A primary factor for the Clean Vehicle Credit is the buyer’s Modified Adjusted Gross Income (MAGI), which cannot exceed certain thresholds. MAGI is calculated by taking your Adjusted Gross Income (AGI) from your tax return and adding back certain deductions, such as student loan interest. For new clean vehicles, the MAGI limits are $300,000 for married couples filing jointly, $225,000 for heads of household, and $150,000 for all other filers.

The income qualification is flexible, allowing you to use the lesser of your MAGI from either the year you take delivery of the vehicle or the preceding year. This provision can be helpful if your income fluctuates. For used clean vehicles, the income limits are lower: $150,000 for married couples filing jointly, $112,500 for heads of household, and $75,000 for all other filers.

Beyond income, other personal requirements apply:

• The vehicle must be purchased for your own use, not for resale.
• It must be used primarily within the United States.
• You cannot be claimed as a dependent on someone else’s tax return.
• For the used vehicle credit, you cannot have claimed another used clean vehicle credit within the three years prior to the purchase date.

Vehicle Requirements for the Credit

A vehicle must meet a distinct set of criteria that differ for new and used cars, involving factors from price to battery component origin. The list of qualifying vehicles changes, so consult the official government source at FuelEconomy.gov for the most current information.

New Clean Vehicles

For a new vehicle to qualify for a credit of up to $7,500, it must meet several requirements. The Manufacturer’s Suggested Retail Price (MSRP) cannot exceed $80,000 for vans, SUVs, and pickup trucks, or $55,000 for other vehicles. The vehicle must also have a battery capacity of at least 7 kilowatt-hours and undergo its final assembly in North America.

The credit amount is split into two $3,750 parts, each tied to specific battery sourcing rules. The first is the critical minerals requirement, which for 2025 mandates that 60% of the value of the battery’s critical minerals must be extracted or processed in the U.S. or a free-trade agreement partner, or recycled in North America. The second is the battery components requirement, which for 2025 stipulates that at least 60% of the value of the battery’s components must be manufactured or assembled in North America.

A vehicle meeting both requirements can receive the full $7,500, while one meeting only one qualifies for $3,750. Additionally, vehicles with battery components from a Foreign Entity of Concern (FEOC) are ineligible. This rule becomes stricter in 2025 to also include critical minerals sourced from an FEOC.

Used Clean Vehicles

The previously-owned clean vehicle credit is worth up to $4,000 or 30% of the sale price, whichever is less. The sale price cannot exceed $25,000, which includes dealer-imposed fees but excludes government charges like taxes. The vehicle’s model year must be at least two years earlier than the calendar year in which you purchase it.

The sale must be conducted by a licensed dealer, as private-party sales do not qualify for this credit. A used vehicle is only eligible for the credit once in its lifetime after August 16, 2022, so it cannot have been previously transferred to another qualified buyer.

Information and Documents Needed to Claim the Credit

To receive the Clean Vehicle Credit, you must gather specific documentation from the seller and file a specific IRS tax form.

Seller’s Report

At the time of sale, the dealer is required to provide you with a copy of a seller’s report. The dealer must also successfully submit this same information to the IRS through its Energy Credits Online portal for the vehicle to be eligible. If you do not receive this report, contact the dealer immediately, because without a successfully submitted report, you cannot claim the credit.

The seller’s report contains the details of the transaction that the IRS needs to verify eligibility. It includes the names and taxpayer identification numbers (TINs) for both the buyer and the dealer, the vehicle identification number (VIN), battery capacity, date of sale, and the final sale price. For new vehicles, it also includes a verification that you are the original user.

IRS Form 8936

The primary tax form for this credit is IRS Form 8936, Qualified Plug-in Electric Drive Motor Vehicle Credit. You must complete and file this form with your annual tax return, regardless of how you choose to receive the credit. The official form and its instructions can be found on the IRS website.

On this form, you will transfer specific information from the seller’s report, including the vehicle’s VIN and the date you placed it in service. The form is used for both new and previously-owned vehicles, with different parts dedicated to each.

How to Claim the EV Tax Credit

You have two options for receiving the Clean Vehicle Credit: receive the benefit immediately at the dealership or claim it later when you file your taxes.

Transferring the Credit to the Dealer

A popular option allows you to transfer the credit to the dealer at the point of sale, effectively using it as an immediate discount. To do this, you must attest to the dealer that you meet all personal eligibility requirements, including the income limitations. The dealer will then use the IRS Energy Credits Online system to verify the vehicle’s eligibility in real-time.

Once the IRS portal accepts the report, the dealer can apply the credit amount directly to your purchase as a down payment or provide it in cash. This makes the financial benefit immediate. Even with this option, you are still required to file Form 8936 with your tax return to report the transfer. If you later determine you do not meet the income limits, you will have to repay the credit amount to the IRS.

Claiming the Credit on Your Annual Tax Return

The traditional method involves claiming the credit directly on your annual tax return. To do this, you will attach the completed Form 8936 to your Form 1040 when you file for the year you took possession of the vehicle. The amount of the credit you are eligible for will reduce your total tax liability for the year.

This credit is non-refundable. It can reduce the amount of tax you owe to zero, but you will not receive any portion of the credit that exceeds your tax liability as a cash refund. For example, if you are eligible for a $7,500 credit but only have a tax liability of $5,000, the credit will eliminate your tax bill, but you will not receive the remaining $2,500.