The $12,500 EV Tax Credit 2022: Everything You Need To Know (Updated)

November 18, 2021

Updated June 2022: After the failure of the Build Back Better bill in late 2021, the existing proposals for the expansion of the EV tax credit were abandoned. The EV tax credit remains at $7,500 for all electric models except those made by Tesla and General Motors.

Senator Joe Manchin told reporters that the additional union-built EV tax credit has been removed from ongoing discussions over the future of the federal electric vehicle tax credit. It looks like there will be no $12,500 tax credit after all. What’s yet to be determined is whether or not the 200,000 sale cap may be removed, and if the credit may become refundable.

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In June, the CEOs of GM, Ford, Stellantis and Toyota jointly urged Congress to lift the cap on the $7,500 electric vehicle tax credit. The rare unified front cited the higher costs to produce EVs as raw materials become tangled in global geopolitics.

“We ask that the per-(automaker) cap be removed, with a sunset date set for a time when the EV market is more mature,” the automakers said.

“Recent economic pressures and supply chain constraints are increasing the cost of manufacturing electrified vehicles which, in turn, puts pressure on the price to consumers.”

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The EV tax credits that are being proposed for 2022 are larger and more robust than previous (and current) electric vehicle tax credits. The incentives had been proposed to go as high as $12,500 on new cars and up to $4,000 on used electric vehicles. And, potentially even more importantly, these tax credits will be refundable!

Current EV tax credits are nonrefundable, meaning the best you can get from the current EV tax credit is cancelling out other federal income taxes you owe, with no refund beyond that. The proposed electric vehicle tax credits for 2022 are refundable, meaning you could potentially get money back from the government for simply buying an EV. Wow.

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Let’s break down the proposed 2022 EV tax credits. Don’t forget to check out the best state-level EV incentives too.

The federal EV tax credit may go up to $12,500

EV tax credit for new electric vehicles

Rivian federal tax credit 2022

Current EV tax credits top out at $7,500. The Build Back Better Act, which would have increased the maximum electric vehicle tax credit to $12,500, was defeated in Congress. The BBB EV tax credit provisions may still influence current efforts to update the incentive, so here are the provisions that were being built into the bill before it was defeated:

  • $7,500 – Purchase an electric or plug-in hybrid vehicle, defined as a car with a battery capacity of at least 40 kilowatt-hours and a gas tank, if any, under 2.5 gallons
  • $4,500 – If the car was assembled at a unionized U.S. plant. (Currently only GM, Ford and Stellantis qualify.)
  • $500 – If the battery pack was made in the United States

Notably, the bill has language that says in 2027, only cars assembled in the U.S. and that have a battery of at least 50 kWH would qualify for the base $7,500 credit.

It’s also critically important to understand how the proposed credit can be applied. Car dealers can claim the credit on a consumers’ behalf. What the heck does that mean? It means dealers can build the tax break into the advertised prices of their cars. Instead of receiving a “credit” back from the government, in that case you’d simply receive a discount on the out the door price of your vehicle. And unlike current EV tax credits, the proposed electric vehicle tax credits for 2022 are refundable. This means that taxpayers can qualify for it even if they have no tax liability.

Current law for the federal tax credits phases them out after a manufacturer sells over 200,000 qualifying vehicles. The proposed language in EV tax credit updates would reset this for Tesla and GM (who have currently passed this threshold), so they would be eligible again.

EV tax credit for used electric vehicles and motorcycles

New EVs are the only ones getting in on the fun, used electric vehicles and two-wheelers are also eligible for federal tax credits in the proposed 2022 plan. This is the first time a credit has been available on a used car.

The current language in the Build Back Better Act has up to $4,000 for buying a used electric or plug-in hybrid vehicle. Interestingly, either the buyer or the seller can apply for the credit.

Electric motorcycles and three-wheeled vehicles are also eligible for up to $7,500 or half the vehicle’s price.

Proposed vehicle price and income limits

Note: The below income and price limits were proposed as part of the failed BBB legislation, and may or may not carry over to standalone legislation in 2022.

The proposed eligibility requirements for the EV tax credit are simple:

  • Non-cars (vans, trucks, SUVs) need to be under $80,000 to be eligible for the credit
  • Cars need to be under $55,000

There’s also an income limit for taxpayers to receive the credit:

  • $500,000 for married couples
  • $250,000 for single people

What vehicles qualify for the Build Back Better EV tax credit?

Tesla federal tax credit 2022

It’s important to understand that the current Build Back Better Act has not passed Congress, and until it does, many points will likely change. That being said, at the time of writing this there is only one current vehicle that would be eligible for the full $12,500 credit. That would be the Chevy Bolt. It is assembled in Michigan and has batteries from a nearby LG facility. Sadly, production of the Bolt is paused while GM fixes defective batteries in some Bolts, which occasionally caught on fire. (You can’t make this stuff up).

Here are the other vehicles that would qualify for the Build Back Better Act EV tax credits if it were to pass as written today:

Make and ModelFull Tax Credit
AUDI
e-tron Sportback (2020-2022)$7,500
e-tron SUV (2019, 2021-2022)$7,500
BMW
i3 Sedan (2014-2021)$7,500
i3s (2018-2021)$7,500
BYD
e6 (2012-2017)$7,500
FIAT
500e (2013-2019)$7,500
FORD
Lightning$12,000
Focus EV (2012-2018)$7,500
Mustang Mach-E (all 2021 trims)$7,500
GENERAL MOTORS (GM)
Bolt$12,500
Chrysler Pacifica Hybrid
HYUNDAI
Ioniq Electric (2017-2021)$7,500
Kona Electric (2019-2022)$7,500
JAGUAR
I-Pace (2019-2022)$7,500
KANDI
EX3 (2019-2021)$7,500
K22 (2019-2020)$7,500
K23 (2020-2022)$7,500
K27 (2020-2022)$7,500
KIA
Niro EV (2019-2021)$7,500
Soul Electric (2015-2020)$7,500
MERCEDES-BENZ
B-Class EV (2014-2017)$7,500
MINI
Cooper S E Hardtop 2 & 4 Door (2020-2022)$7,500
MITSUBISHI
i-MiEV (2012, 2014, 2016, 2017)$7,500
NISSAN
LEAF (2011-2022)$7,500
POLESTAR
Polestar 2 (2021)$7,500
Polestar 2 Long Range – Single & Dual Motor (2022)$7,500
PORSCHE
Taycan (2020-2021)$7,500
RIVIAN
R1T (2022)$7,500
SMART USA
EQ fortwo Coupe (2019)$7,500
EQ fortwo Cabrio (2019)$7,500
TESLA
Model 3$7,500
Model Y$7,500
TOYOTA
RAV4 EV (2012-2014)$7,500
VOLKSWAGEN
e-Golf (2015-2019)$7,500
ID.4 EV (First/Pro/Pro S) (2021)$7,500
VOLVO
XC40 Recharge Pure Electric (2021-2022)$7,500

This page will update as we learn more about proposed updates to EV tax credits in 2022.

Ford Lightning federal tax credit 2022

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32 Comments

  1. Sunny Daze

    There is a Ford Escape plug in hybrid (2021-2022) Would that not be eligible for the proposed credit?

    Reply
      • Pat Scida

        Hi Zach – how would the Escape plug-in hybrid qualify? Everything I read seems to say that to qualify a vehicle needs to have a 40 kilowatt battery. My understanding is that the Escape plug-in hybrid has a ~15 kw battery. There also seems to be a maximum size limitation for gas tanks (2.5 gallons maybe) in the proposed law. So it seems to me that these requirement would exclude pretty much all plug-in hybrids from qualifying…but I could be missing something! Thanks!

        Reply
        • Zach Shefska

          Pat, you’re spot on. The language is still being worked through the Senate, so it will likely evolve a bit, however what you’ve stated here is 100% correct as far as what as passed the House so far. We’ll update the list above as soon as the bill passes the Senate.

          Reply
        • Tom Reuter

          Pat, I have completed a text search of HR 5376 that passed in the House. I searched for “2.5”, “gas tank”, “gasoline tank”, “maximum size” and found nothing that would be a limit for the EV tax credit. Plug-in hybrids would be eliminated from the EV tax credit if this 2.5 gallon limit were true. Do you remember where to saw this limitation?

          Reply
          • Pat Scida

            Hi Tom,
            I’ve seen a bunch of articles that mention it. Here’s one: https://www.cnet.com/roadshow/news/ev-tax-credit-biden-bill-senate/

            But as far as what’s in HR 5376 that passed the House, I think you’re right. I couldn’t find anything in there about the gas tank size in there either. Maybe that was in an earlier or different version? And I drilled down a little more about the battery size limitation. From what I can tell the bill defines a “New Qualified Plug-in Electric Vehicle as one that has a battery capacity not less than 7 Kwh (changes to not less than 10 Kwh after 2023) (page 1872-3 of the HR76 (per my pdf version)). If the vehicle meets that definition, there’s a $4,000 base tax credit (p. 1869). If the battery capacity is over 40 Kwh, then there’s an additional $3,500 tax credit (p. 1869). Then after that is the the controversial $4,500 domestic assembly/union and the $500 domestic content (including battery manufacture location) tax credits and requirements. The domestic assembly and content language is on pp. 1879-1880).

            So, if I read this right, RAV4 Prime purchasers would get a $4,000 tax credit, and Ford Escape PHEV purchasers would get $8,500 or $9,000 in tax credits (not sure about where the Escape batteries are made).

          • Tom Reuter

            Pat and I agree that writers like Sean Symkowski at CNet made a mistake and there is no limitation of 2.5 gallon gas tanks in the final version of HR5376. I recommend Zach remove that from his article.

            As for who gets how much.
            I think RAV4 prime gets $4,000 base and $3,500 more because it has a battery with a capacity not less than 40 Kwh. It is shipped into the US from Japan.
            I think Escape PHEV gets $4,000 base, not the $3,5000 extra because battery is below 40 kwh. Then add $4,500 for domestic/union assembly in Louisville, KY. There maybe add an additional $500 for domestic battery content. I believe the battery pack is assembled in Rawsonville, MI. I saw a press release that the small battery pack used in the gas hybrid (not plug-in) was assembled in Rawsonville. I do not know where the battery cells are made. They might come from overseas.

    • Ryan

      What about Chrysler Pacifica Hybrid? Does that qualify? I know on their website it says it does but this list somehow excludes it.

      Reply
      • Zach Shefska

        That’s on me, Ryan! Updating right now! Based on the current language in the bill that would be eligible for $12,000 in tax credits.

        Reply
  2. John

    I know with previous credits there was a rush on the large multi seat golf type electric carts. Let’s just say the gray area was exploited in the credit verbiage. Any room here for that

    Reply
  3. Mark B

    It seems like the 2.5 gallon gas tank limit would exclude basically all hybrids, right? For example: The Ford Escape plug in has an 11 gallon tank. Am I reading the qualifications right?

    Reply
    • Zach Shefska

      You’re spot on, Mark. We’ll have to see what changes happen now that the Build Back Better bill is in the Senate.

      Reply
  4. Charlie

    The Porsche Taycan retail price would exclude it from the tax break, no? Cars capped at $55000, right?

    Reply
  5. Ed

    What can you say about the Hyundai Ioniq 5, Kia CV 6, and further down the line Toyota/Subaru electrics that will be coming around mid year? Is my best course of action, waiting until Build Back Better is finally signed?

    Reply
    • Zach Shefska

      Staying patient and waiting until the bill passes is the best bet.

      Reply
  6. Ed

    Zack,

    Thanks…..

    You guys have a great site……

    Enjoy the Holiday….

    Ed

    Reply
  7. John Ge

    Why are old cars shown here if used cars are not eligible for the full tax credit? Surely you won’t find a new 2014 Toyota Rav4.

    Reply
    • Zach Shefska

      John, we will update this list ASAP once Congress passed the Build Back Better bill.

      Reply
  8. Ken

    What about the Jeep Wrangler with the 4xe plug in hybrid engine? That engine is supposed to be made available in the new Jeep Grand Cherokee as well.

    Reply
    • Zach Shefska

      Ken, the fuel tank is too large on the 4xe to qualify based on the current bill’s language.

      Reply
  9. Robert

    How will dealers claim the tax credit at the point of sale if the credit is subject to income limits? Does this mean the discount would be calculated based on the previous year’s tax return?

    Reply
    • Zach Shefska

      Robert, great question. Each dealership will handle this differently, however when they run your credit they’ll have a pretty good sense for if you qualify or not.

      Reply
  10. Tom Reuter

    I wanted to add two concerns for the readers. First, it is not very difficult to take the vehicle MSRP over the limit ($55,000 for sedans see page 1871 of HR5376). I checked the Tesla Model 3 website and it seems pretty easy to exceed the limit if you order extended range and maybe red paint. If you exceed the MSRP (page 1871), “no credit shall be allowed.” So you get nothing!
    Second issue – what’s a sedan, what’s a SUV. I am interested in a Ford Mach-e and it sure looks like an SUV. However, as a You Tube person named Bearded Tesla Guy has pointed out, the HR 5376, says (page 1874) that the law would follow the regulations prescribed by the Environmental Protection Agency. If you go to Fuel Economy dot gov, compare side by side, Specs tab. You can see the classifications. Tesla model 3 is a midsize car under the sedans subcategory and Ford Mach-e is a small station wagon. I know the mach-e looks like an SUV but it is not under the SUV category. From the website, any Mach-e Premium with extended range, or Mach-e Route 1 AWD will get you over the $55,000 limit. I love the vehicle but the extra range is what I need to reach the family at the holidays without stopping.

    Reply
  11. Jeff Purcell

    Any idea whether these new rules will be retroactive for vehicles purchased any time in 2022, or will they apply to cars purchased after the bill is passed (assuming it passes).

    Reply
    • Zach Shefska

      Jeff, it’s unclear right now whether that would be the case or not. We’ll let you know once we see the new proposed language.

      Reply
  12. Gregg Brent

    I find it strange that many of Ford’s Mach e configurations come in at ‘just’ over $55K. Like ordering Premium package with extended range battery option, comes in at $55,100. The California Route 1 package with extended range option comes in at $55,475. Wouldn’t it make sense for Ford to adjust these prices slightly to accommodate the $55,000 limit for tax credit since Extended Range is a popular choice for EV buyers?

    Here in NJ, there was a state incentive, with $55k cap for vehicles MSRP to be eligible. I would think Ford would recognize the opportunity to market Mustangs price-wise to make more of it’s cars available for these tax incentives.

    Reply
  13. Larry Sibley

    Slightly off topic but for 2021 taxes, was Dec 31 the deadline to buy an EV and get the credit or is it like contributing to your Roth IRA and you have until April to buy one and you can still count it on your 2021 taxes?

    Reply
  14. A. Bloom

    As of the last week, it is clear that Toyota, significantly, and also Nissan and Ford, may soon be in the same category as Tesla and GM, as Toyota will hit 200,000 of EV sales by early summer and the others soon after. That means there is a ramping down by half of the credit available, and then after that it goes to zero as it is for Tesla and GM. Weirdly, this means that basically the credit really (in the existing markets) exists primarily for the Korean companies, and possibly for BMW, if they can ever finish building their plant in Tennessee.

    Reply
    • Dave

      Does anyone know which website to check whether Ford has sold 200,000 EV for $7500 Tax credit because I am still waiting for the reserved F-150 Lightning. Thank you and have a nice weekend

      Reply
  15. Mike

    Hi do I get rebate EV pickup truck made Chinese manufactured, I paying underS12.000,00 Canadian dollars?

    Reply

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