Clean vehicle credit
How the EV tax credit works in 2026
The federal Clean Vehicle Credit, restructured by the Inflation Reduction Act (IRA) in 2022, provides up to $7,500 toward the purchase of a new qualifying electric vehicle. Unlike the pre-IRA credit, which had a manufacturer cap (200,000 vehicles per automaker), the current credit has no manufacturer limit but imposes income caps, MSRP limits and domestic sourcing requirements for critical minerals and battery components.
New EV credit structure: two $3,750 halves
The $7,500 credit is split into two halves. Each half has its own qualification requirement:
| Component | Credit | Requirement |
|---|---|---|
| Critical minerals | $3,750 | A required percentage of critical minerals in the battery must be extracted or processed in the US or a free-trade-agreement country |
| Battery components | $3,750 | A required percentage of battery components must be manufactured or assembled in North America |
| Maximum total | $7,500 | Both requirements met |
A vehicle might qualify for $7,500, $3,750 or $0 depending on its supply chain. The IRS and Department of Energy publish an updated list of qualifying vehicles and their credit amounts.
Income and MSRP limits
| New EV | Used EV | |
|---|---|---|
| Max credit | $7,500 | $4,000 (or 30% of price) |
| Single MAGI limit | $150,000 | $75,000 |
| HOH MAGI limit | $225,000 | $112,500 |
| MFJ MAGI limit | $300,000 | $150,000 |
| Sedan MSRP/price cap | $55,000 | $25,000 |
| SUV/truck MSRP/price cap | $80,000 | $25,000 |
Used EV credit: a separate program
The used EV credit (IRC Section 25E) provides up to $4,000 or 30% of the sale price, whichever is less, for a pre-owned electric vehicle. The vehicle must be at least 2 model years old, purchased from a licensed dealer (not private sale), and priced at $25,000 or less. Income limits are lower: $75,000 for single filers, $150,000 for MFJ. This credit is available once per vehicle (the vehicle can only qualify for the used credit once in its lifetime).
Leasing vs. buying: different rules
When you lease an EV, the leasing company claims the credit as the vehicle owner. The MSRP caps and assembly requirements do not apply to commercial/fleet purchases, which means leased vehicles that exceed the $55,000/$80,000 caps can still generate the credit for the lessor. Many lessors pass this savings through as a reduced capitalized cost or lower monthly payment. If you are eyeing an EV above the MSRP cap, leasing may be the only way to access the federal credit.
State EV incentives stack on top
Many states offer additional EV rebates or credits that stack on top of the federal credit. California, Colorado, New York, Connecticut and others have programs ranging from $1,500 to $7,500. These are subject to their own income and vehicle limits. Check your state's incentive program for the combined savings.
Common questions
EV tax credit FAQ
How much is the EV tax credit in 2026?
The federal Clean Vehicle Credit for new electric vehicles is up to $7,500 in 2026. The credit is split into two components: $3,750 for meeting critical mineral requirements and $3,750 for meeting battery component requirements. The vehicle must be assembled in North America and meet MSRP caps ($55,000 for sedans, $80,000 for SUVs, trucks and vans). A separate used EV credit of up to $4,000 is also available.
What are the income limits for the EV tax credit?
For the new vehicle credit, your modified adjusted gross income must be below $150,000 (single), $225,000 (head of household) or $300,000 (married filing jointly) in the current or prior year. For the used vehicle credit, the limits are $75,000 (single), $112,500 (HOH) or $150,000 (MFJ). These limits apply to either the current year or prior year — you qualify if either year is below the threshold.
What is the MSRP limit for the EV credit?
For the new vehicle credit, the manufacturer's suggested retail price (MSRP) must not exceed $55,000 for sedans, hatchbacks and wagons, or $80,000 for SUVs, crossovers, trucks and vans. The IRS classification, not the marketing label, determines which category applies. For used EVs, the sale price must be $25,000 or less.
Can I get the EV tax credit at the dealership?
Yes. Starting in 2024, eligible buyers can transfer the credit to a registered dealer at the time of purchase, effectively receiving the credit as a point-of-sale discount. The dealer reduces your purchase price by up to $7,500, and the dealer claims the credit from the IRS. You still must meet the income requirements.
Is the EV tax credit refundable?
The new vehicle credit ($7,500) is nonrefundable — it can reduce your federal tax to zero but does not generate a refund beyond that. If your tax liability is only $5,000, you get $5,000 in credits and lose $2,500. However, the point-of-sale transfer option effectively bypasses this limitation because the dealer claims the credit. The used EV credit ($4,000) is also nonrefundable.
Does leasing an EV qualify for the credit?
When you lease, the leasing company (not you) claims the credit as the vehicle owner. However, many lessors pass the savings through as a lower lease payment or reduced capitalized cost. Leased vehicles are not subject to the MSRP caps or the North American assembly requirement because the credit goes to the commercial entity. This can make leasing more attractive for expensive EVs that exceed the MSRP cap.
Which EVs qualify for the full $7,500 credit?
The list of qualifying vehicles changes as manufacturers update their supply chains for critical minerals and battery components. The IRS and Department of Energy maintain an updated list at fueleconomy.gov. Popular models that have qualified include certain Tesla, Chevrolet, Ford and Rivian vehicles, but eligibility can change quarterly. Always check the current list before purchasing.
- Sources: IRC Section 30D (new clean vehicle credit) · IRC Section 25E (used clean vehicle credit) · Inflation Reduction Act of 2022 · IRS Notice 2023-1.
- 🔄 Last updated July 2026 · Tax year 2026
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