Federal EV Tax Credit in 2025

Understanding the Federal EV Tax Credit in 2025 is essential as the demand for electric vehicles (EVs) continues to grow. One of the most significant financial incentives for EV buyers this year is the federal clean vehicle tax credit, which can provide up to $7,500 for new EVs and $4,000 for used EVs.

However, recent changes in eligibility criteria, income limits, and point-of-sale benefits mean that consumers must carefully navigate the requirements to take full advantage of these savings. Here’s what you need to know before purchasing an EV in 2025.

How Much is the Federal EV Tax Credit Worth?

The tax credit amount depends on whether you are purchasing a new or used electric vehicle:

• New EVs – Up to $7,500 in federal tax credits, provided the vehicle meets specific battery and manufacturing requirements.
• Used EVs – A credit of up to $4,000, available for used EVs that are at least two years old, purchased from a dealer, and priced at $25,000 or less.

These credits apply only to eligible vehicles, and the list of qualifying models changes as automakers adjust their manufacturing to meet federal requirements.

Which Vehicles Qualify for the 2025 EV Tax Credit?

So far, 23 models qualify for the full $7,500 credit in 2025, including:

• Acura – ZDX
• Cadillac – LYRIQ, OPTIQ
• Chevrolet – Blazer EV, Equinox EV, Silverado EV
• Chrysler – Pacifica PHEV
• Ford – F-150 Lightning (three variants)
• Honda – Prologue
• Jeep – Wagoneer S
• Kia – EV6, EV9 (starting in 2026)
• Tesla – Nine qualifying models

For a regularly updated list of eligible vehicles, visit the IRS website for new clean vehicle credits.

Key Eligibility Requirements for Buyers

To claim the EV tax credit in 2025, buyers must meet certain eligibility criteria beyond just purchasing a qualifying vehicle.

1. Income Limits

The credit is only available to individuals and households below certain income thresholds:

• Single tax filers – Must have a modified adjusted gross income (AGI) under $150,000
• Joint filers (married couples) – Must have an AGI under $300,000
• Head of household – Must have an AGI under $225,000

If your income exceeds these limits, you will not qualify for the credit.

2. Vehicle Requirements

To receive the full $7,500 tax credit, a vehicle must meet:

• Final Assembly in North America – The car must be assembled in the U.S., Canada, or Mexico.
• Battery Component Rules – A percentage of the battery materials must come from the U.S. or a free-trade agreement partner.
• MSRP Limits – The price of the EV cannot exceed:
  • $80,000 for SUVs, pickup trucks, and vans
  • $55,000 for sedans and smaller vehicles

For used EVs, the vehicle must be at least two years old and purchased from a dealership. The IRS used clean vehicle credit provides additional details on requirements.

3. Point-of-Sale Benefit

A major change in 2024 and beyond is the ability to apply the tax credit directly at the dealership, reducing the purchase price at the time of sale rather than waiting until tax season. This means eligible buyers can immediately benefit from the incentive without needing to claim it as a tax refund.

Need Help Understanding the Federal EV Tax Credit in 2025?

While the federal EV tax credit can make electric vehicles more affordable, these incentives are subject to change. Automakers adjust their production to comply with federal requirements, meaning some models may lose eligibility throughout the year. Additionally, tax laws can shift, potentially affecting the available credit in future years. If you’re considering purchasing an EV, now is the time to review your options, verify vehicle eligibility, and confirm that you meet the income requirements. With evolving regulations and shifting eligibility criteria, understanding the federal EV tax credit can be complex. The team at Anderson, Adkins & Crawford can help you determine your eligibility, maximize potential savings, and ensure compliance with IRS guidelines.

Have questions? Contact us today at info@augustacpas.com or 706-288-2000.