Thinking about buying an electric car? The EV tax credit in 2025 could save you up to $7,500—if you qualify.
The EV tax credit has enabled more people than ever to make the switch to electric vehicles. More than 1.3 million EVs were sold in 2024 alone, according to Kelley Blue Book. But the catch? Many people still don’t understand who qualifies, how much they can claim, or how to ensure they don’t leave money behind.
This article addresses these questions.
If you're thinking about a used Tesla, hunting for the best budget electric cars, or checking out new cars under $25,000, you’ll want to know precisely how the EV tax credit works in 2025.
What You’ll Learn in This Guide
In this article, we’ll answer some common questions like:
What is the EV tax credit?
What are the eligibility requirements for applying for the EV tax credit?
What vehicles qualify for the EV tax credit?
Overview
What Is the EV Tax Credit in 2025?
The EV tax credit, also known as the Clean Vehicle Credit, is a federal program that provides up to $7,500 off the purchase of a new electric vehicle or up to $4,000 off the purchase of a used electric vehicle.
It is important to clarify a common misconception regarding certain benefits. These are not rebates issued by the dealership. They are tax credits. This distinction is significant, as eligibility for the credit requires that one has a federal tax liability. If the amount of the tax credit exceeds the total tax owed, individuals will only receive a refund up to the amount of their tax bill. Any remaining credit will not apply to the following tax year.
New EV Tax Credit Requirements (purchased in 2023 or after)
Buyer Qualifications:
Must buy the vehicle for personal use (not resale)
Must primarily use the vehicle in the U.S.
Income limits apply:
$300,000 for married couples filing jointly
$225,000 for heads of household
$150,000 for all other filers
Note: You can use the lower income from either the year of delivery or the prior year.
Vehicle Requirements:
Must be new (first owner)
Battery capacity of at least 7 kWh
Gross vehicle weight under 14,000 lbs
Final assembly must be in North America
Manufactured by a qualified automaker
Must meet critical mineral and battery component requirements (after April 18, 2023):
$3,750 for meeting critical minerals
$3,750 for meeting battery components
$7,500 if both requirements are met
Price Limits (MSRP cap):
$80,000 for SUVs, vans, and trucks
$55,000 for sedans and other vehicles
Note: MSRP includes manufacturer-installed options but excludes destination fees.
Dealer Responsibilities:
Must provide a time-of-sale report
Must report your name and TIN to the IRS
Used EV Tax Credit Requirements
Buyer Qualifications:
Must be an individual, not a business
No prior claim of a clean vehicle credit within the last 3 years
Must purchase from a licensed dealer
Must not be the original owner of the vehicle
Must primarily use the vehicle in the U.S.
Income limits apply:
$150,000 for married filing jointly
$112,500 for heads of household
$75,000 for all other filers
Note: The lower income from either the delivery year or the previous year applies.
Vehicle Requirements:
The vehicle must be at least 2 years old
Must be purchased from a dealer
Sale price must be $25,000 or less
Must have a battery capacity of at least 7 kWh
Must weigh less than 14,000 lbs
Must be eligible as a qualified clean vehicle
Credit Amount:
Up to 30% of the sale price, capped at $4,000
Pro Tip: This credit is only applicable if you purchase from a licensed dealer and follow the IRS guidelines.
Vehicles That Qualify for the EV Tax Credit
Which cars will qualify for the EV tax credit in 2025?
Many 2023 cars still qualify, especially models assembled in the U.S. That includes several of the best budget electric cars. Please note that the list is subject to change as manufacturers adjust their car production and assembly processes. Some models qualify one month but not the next. It’s smart to double-check using the tool at FuelEconomy.gov to check if the car you're considering meets the requirements.
New EVs That May Qualify
Tesla Model 3: Widely recognized for its strong sales, advanced technology, and significant role in popularizing electric vehicles.
Ford F-150 Lightning: This electric truck stands out as an EV version of America's best-selling vehicle, making it a highly anticipated and well-known electric offering.
Chevrolet Bolt EUV: Known for being an accessible and affordable electric SUV option, it has been a popular choice for budget-conscious EV buyers.
Hyundai Ioniq 5: This vehicle gained considerable attention for its distinctive retro-futuristic design, fast charging capabilities, and competitive range.
Nissan Ariya: As Nissan's second major electric vehicle (EV) following the Leaf, the Ariya is a notable entrant in the electric SUV market, featuring modern design elements.
Used EVs That May Qualify
Tesla Model 3: Even as a used car, it maintains strong demand due to its brand recognition, performance, and charging network.
Chevrolet Bolt: This model is a popular choice in the used EV market due to its relatively affordable price point and practical range.
Nissan Leaf: As one of the earliest mass-market EVs, the Leaf has a long history and is frequently available as an affordable used electric car option.
Toyota Prius Prime Plug-In Hybrid: While a PHEV, its association with the highly successful Prius line and its fuel efficiency make it a recognizable and practical used hybrid option.
BMW i3 Sedan: This distinctive and recognizable urban electric car stands out for its unique design and BMW branding, making it a popular used EV choice.
Important Note: Not all variations of the models mentioned will automatically meet the criteria. Kindly consult the dealer or seller to confirm the eligibility of your particular vehicle.
Pro Tip: Planning to buy your EV across state lines? Refer to our Hybrid & EV Shipping Guide for expert tips on safe and affordable delivery.
State-Level Add-Ons: Colorado EV Tax Credit & Others
The federal EV tax credit is only part of the story. Some states offer their own incentives, and the Colorado EV tax credit is one of the most generous.
The standard Colorado Innovative Motor Vehicle Credit for new EVs and PHEVs is $3,500. And if the EV you choose costs less than $35,000 and you meet income guidelines, you might qualify for an additional $2,500.
That’s up to $7,500 federally plus $6,000 from the state—a total of $13,500 in potential savings.
Other States with EV Incentives
New Jersey: New Jersey offers a significant incentive by exempting electric vehicles from sales tax. Additionally, the "Charge Up New Jersey" program offers up to $4,000 for the purchase or lease of new EVs, along with a $250 rebate for home chargers.
California: While California previously offered substantial rebates through the Clean Vehicle Rebate Project (CVRP), this program is largely closed to new applications as of November 2023. Buyers should now primarily look for local or utility-specific rebates, rather than relying on this statewide program.
Oregon: Oregon offers a valuable Clean Vehicle Rebate Program, providing up to $2,500 for new EVs. Low- and moderate-income residents can also qualify for an additional $5,000 through the Charge Ahead Rebate Program, potentially totaling $7,500 for new or used EVs.
Pro Tip: You may also be eligible for local EV charger rebates. Visit our EV Charger Rebates Guide for more information.
How to Claim the EV Tax Credit in 2025
You’ve picked the car. You checked that it qualifies. Now, here’s how to claim the EV tax credit and get your savings.
For New EVs
Confirm the car is eligible
Buy from a licensed dealer
Get the correct paperwork
File IRS Form 8936
Ask about point-of-sale options
For Used EVs
Confirm it’s at least 2 years old
Keep the price under $25,000
File using Form 8936
Verify the VIN hasn’t been used
Don’t forget to check for state-level programs, such as the Colorado EV tax credit, as many of them require separate applications.
EV Leasing & the Tax Credit: What You Should Know
If you are considering leasing an EV, it is important to note that you may still benefit from the EV tax credit. However, the benefits may not align with common expectations.
Here's how it works:
Credit goes to the lessor
When you lease an electric vehicle, the federal tax credit (specifically the Commercial Clean Vehicle Tax Credit, IRS Code 45W) is claimed by the dealer or leasing company, as they are considered the legal owner of the vehicle. As the lessee, you do not claim it on your personal tax return.
Savings are passed on to the lessee
While the credit goes to the lessor, they often pass on the benefit to the consumer through reduced monthly payments, a lower capitalized cost, or a decreased down payment. This makes it crucial for the consumer to inquire and negotiate with the dealership to ensure these savings are applied.
Final Thoughts: Maximize Your EV Savings
If you're planning to buy a new or used electric vehicle in 2025, understanding the EV tax credit could be the difference between paying full price and saving thousands. With federal savings up to $7,500, plus extras like the Colorado EV tax credit, these programs make EVs more affordable than ever.
Be sure to verify which cars qualify, gather the necessary documents, and ask the relevant questions, especially if you're considering leasing or purchasing an EV out of state. And once you're ready to bring your new ride home, let AmeriFreight Car Shipping help make the final step stress-free and straightforward.
Ship Your EV with AmeriFreight Car Shipping
Once you’ve chosen your EV and calculated your tax credit savings, you still need to transport the car home, especially if you’re buying online or from another state. That’s where AmeriFreight Car Shipping comes in.
We offer a range of auto transport services for your EVs. Our more than two decades of experience transporting vehicles solidifies our position in the industry.
Frequently Asked Questions (FAQs)
Does a used EV have to be purchased from a licensed dealer for the tax credit?
Yes, a used electric vehicle must be purchased from a licensed dealer registered with the IRS to qualify for the used electric vehicle tax credit.
Can I get a used EV tax credit if the car was already claimed by a previous owner?
No, you cannot get a used EV tax credit if the car has already been used to claim the credit by a previous owner or was transferred to a qualified buyer after August 16, 2022.
Does the EV tax credit apply to plug-in hybrids (PHEVs)?
Yes, the federal clean vehicle tax credit applies to both eligible plug-in hybrid electric vehicles (PHEVs) and all-electric vehicles.
Are there EV tax credits for charging station installation?
Yes, there is a federal tax credit, the Alternative Fuel Vehicle Refueling Property Credit, that allows individuals to claim 30% of the cost, up to $1,000, for the installation of a qualified home charging station in eligible census tracts.
