All You Need To Know About The Federal Clean Vehicle Tax Credit For 2025

What’s new for 2025? 

Well for starters the existing $7500 federal tax credit will remain the same. The new clean vehicle tax credit applies to new electric, plug-in hybrid, and fuel-cell electric vehicles. To qualify, the vehicles must be assembled in North America and meet specific sourcing requirements for both battery components and critical minerals used in their production. 

The credit is divided into two parts: $3,750 for meeting battery part requirements and $3,750 for meeting critical minerals requirements. Vehicles that satisfy both conditions are eligible for the full $7,500 credit.

Most US-made EVs from Ford, GM, and Tesla qualify for the full rebate while certain European offerings come with $3,750 only. Here is the full list.

Also Read- Essential Tips for First-Time Car Buyers

Buying Used EVs Makes A Bit More Sense Now

EVs have one-upped gas-powered cars in nearly every metric except when it comes to maintaining their value. EVs online lose 30-40 percent of their value after a couple of years on the market, something that the Federal government noted and introduced a $4000 subsidy on EVs and hybrids that are a couple of years old. 

This means that every used EV made for 2023 MY will be eligible for a federal tax credit of up to $4000.These incentives also apply to Fuel cell cars and hybrids to some extent.

How Can I Qualify for a Federal EV tax credit? 

The first thing you have to do is to make sure that the EV you are buying has both battery and mineral requirements sorted for a full $7500 rebate. The MSRP cap for SUVs, Trucks, and Vans is $80,000 while sedans and hatchbacks have to be under $55,000. 

For a new EV, you need to follow these Income limit guidelines

• $300,000 for married couples filing jointly or a surviving spouse
• $225,000 for heads of households
• $150,000 for all other filers

The used EV tax credit of $4,000 or up to 30 percent of the vehicle value is only applicable to vehicles that are two years older and you have both the car from a licensed dealer for a maximum of $25,000

Also Read- An Essential Guide To Buying a Used Car

For Used EVs Here Are the Income limits

• $150,000 for married filing people jointly or surviving spouses
• $112,500 for heads of households
• $75,000 for all other filers

Another perhaps the most important part to keep in mind is that the dealer has filed the Time-of-Sale Report which you need to attach while filing your tax return along with Form 8936

Also Read- You Don’t Need To Go Full EV, Yet.