IRS updates rules for EV tax credits in 2024

EV tax credits 2024 overview: 

• Who: The U.S. Treasury issued new guidelines for electric vehicle (EV) tax credits that went into effect at the beginning of the year.
• Why: The guidelines include battery sourcing requirements that aim to pull the supply chain for U.S. EVs away from China. 
• Where: The new rule impacts the EV industry and prospective purchasers nationwide.

A number of electric vehicle (EV) owners will miss out on a tax credit of up to $7,500 this year following the implementation of a new battery sourcing rule that took effect on Jan. 1. 

Owners of the Nissan Leaf, Tesla Cybertruck All-Wheel Drive and some Tesla Model 3 and Chevrolet Blazer EV vehicles, among others, will miss out on the tax credit in 2024, Reuters reports. 

The U.S. Treasury issued the new guidelines in December. They lay out new requirements for battery sourcing that reportedly aim to pull the supply chain for U.S. EVs away from China. 

Nineteen EV models, including varying versions of the same vehicle type, will still qualify for a tax credit under the new guidelines, a decrease from 43 prior to the new rules, Reuters reports. 

Number of eligible EVs could change as manufacturers submit info

The actual number of EV models that will continue to qualify for a tax credit under the new rules could change, according to the Treasury, which reportedly said some EV manufacturer’s have yet to submit information on eligible vehicles. 

Consumers who purchase eligible EVs at a participating dealership will be able to claim a tax credit of up to $7,500 at the point of sale under the new rule, with the credit setting limits on both the vehicle’s price and a buyer’s income, according to Reuters. 

Other vehicles that will reportedly no longer qualify for the tax credit include the Volkswagen ID.4, Tesla Model 3 Rear Wheel Drive, BMW X5 xDrive50e, Audi Q5 PHEV 55, Cadillac Lyriq and Ford E-Transit, among others. 

The U.S. Treasury previously reformed EV tax credit guidelines as part of the 2022 Inflation Reduction Act, with the law requiring EVs to be manufactured in America to qualify for a tax credit. This removed eligibility for almost 70% of all eligible models at that time, Reuters reports. 

Last July, automakers BMW, General Motors, Hyundai, Kia, Mercedes-Benz and Stellantis announced they would team up to create a network of 30,000 EV charging stations across the United States. 

Have you received a tax credit after purchasing an electric vehicle? Let us know in the comments.

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