What Biden's IRA means for EV tax credits: 2024 updates
Which cars are eligible and how much money can owners save?


President Joe Biden's Inflation Reduction Act (IRA) aims to address the deficit as well as inflation, and places a big emphasis on fighting climate change. Part of the legislation revamped the existing EV tax credit, and this change has sparked some confusion. That confusion could compound in 2024, as the new year heralds further shifts to the EV tax credits.
Here's a closer look at how the EV tax credit works for 2024 and which vehicles are eligible.
What exactly are EV tax credits?
A tax credit is money off your final tax bill, in this case for buying a new or used electric vehicle. This credit, which is offered until December 2032, applies to "fully electric vehicles and plug-in hybrid vehicles" that meet certain requirements, explains NPR.
The Week
Escape your echo chamber. Get the facts behind the news, plus analysis from multiple perspectives.

Sign up for The Week's Free Newsletters
From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.
From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.
The credit can be up to $7,500 for new EVs. For used vehicles, it's "up to $4,000, limited to 30% of the sale price," according to Nerdwallet. The exact amount is determined based on a calculation that takes into consideration factors such as the vehicle's sourcing and assembly.
What's changing for EV tax credits in 2024?
If you're hoping to take advantage of the EV tax credit, there are a few notable changes in 2024 to be aware of:
Fewer models qualify. "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," reports CNN Business. While many vehicles remain eligible, "the Tesla Cybertruck All-Wheel Drive, some Tesla Model 3s, the Chevrolet Blazer EV, and the Nissan Leaf are some of the vehicles that lost eligibility for buyer tax credits," according to Investopedia. If you have a certain model in mind, you can use the tool on the FuelEconomy.gov website to find the latest information on eligible vehicles.
Battery and battery component requirements are tightening. Among the stipulations that a vehicle must meet to qualify for the full EV tax credit are steeper requirements regarding batteries and the critical minerals used in a car's battery. In 2024, 60% of a car's battery "must be assembled or manufactured within North America," and "50% of critical minerals in the car's battery must be extracted or processed within the U.S. or within a country with whom the U.S. has a free-trade agreement," explains Nerdwallet. Further, per Nerdwallet, "beginning in 2024, vehicles may also not source battery parts from a foreign country of concern (e.g., China)."
A free daily email with the biggest news stories of the day – and the best features from TheWeek.com
You can now get an instant rebate. Whereas before it was necessary to wait to file your tax return to get your credit, now "there's a new option to take the credit as a rebate right when you purchase the vehicle," reports NPR. Additionally, if you opt to take the credit as a rebate, "you get the full credit, regardless of your tax liability."
According to CNN Business, "whether these new tax credit rules, or last year’s rules, apply depends on when the vehicle was 'placed into service,' to use IRS terminology — in other words, "even if you signed the paperwork to purchase a vehicle in 2023 but won't take delivery of the vehicle until this year, the new 2024 tax rules apply."
Who (and which electric vehicles) will qualify for the credit?
To claim an EV tax credit, you must meet certain income limits. For new cars, your modified adjusted gross income (AGI) must be $150,000 or less ($300,000 for married couples filing jointly, and $225,00 for those filing as head of household). For used cars, the income cap is $75,000 for single filers, $112,500 for heads of household, and $150,000 for married couples filing jointly. However, as NPR underscores, this limit is based on adjusted gross income rather than total income, and "[c]ontributions to a retirement account, among other things, reduce a taxpayer's AGI."
Further, the vehicle you're purchasing must meet certain requirements. For instance, it must be made in the U.S. and meet "battery size and vehicle weight requirements," per NPR. Additionally, the vehicle must fall under price limits: $55,000 or less for new cars, $80,000 or less for trucks and SUVs, and $25,000 or less for used vehicles.
Becca Stanek has worked as an editor and writer in the personal finance space since 2017. She previously served as a deputy editor and later a managing editor overseeing investing and savings content at LendingTree and as an editor at the financial startup SmartAsset, where she focused on retirement- and financial-adviser-related content. Before that, Becca was a staff writer at The Week, primarily contributing to Speed Reads.
-
Fit for a king: must-visit palaces around the UK
The Week Recommends Our pick of the nation’s most magnificent residences for nobles and royals
-
Is Andy Burnham making a bid to replace Keir Starmer?
Today's Big Question Mayor of Manchester on manoeuvres but faces a number of obstacles before he can even run
-
Christian Brückner: why prime suspect in Madeleine McCann case can refuse Met interview
The Explainer International letter of request rejected by 49-year-old convicted rapist as he prepares to walk free
-
How to put student loan payments on pause
The Explainer If you are starting to worry about missing payments, deferment and forbearance can help
-
The pros and cons of buying a new-build house
the explainer Repairs and maintenance will be minimal on a brand new build — but moving into an existing home can be easier upfront
-
What's the best time of year to buy a house?
The Explainer There are pros and cons to each season
-
How much does it cost to move? Here's how to budget and save.
the explainer Factors like move distance and the weight of your furnishings can affect the total cost — but there are several ways to economize
-
When does a personal loan make sense?
the explainer Personal loans tend to be more flexible and versatile than home, auto or student loans
-
Should you downsize for retirement? Here's what to consider.
The Explainer Moving to a smaller place may seem easier, but there are also some real benefits to staying put
-
What to do if you want to move but don't want to give up your low mortgage rate
the explainer 30-year mortgage rates are currently averaging 7% — and homeowners who secured rates closer to 3% during the pandemic are reluctant to sell their homes
-
Is hands-off investing the way to go?
The Explainer In many cases, your money might be better off left alone