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

November 18, 2021
Written by: Zach Shefska

Update 11/19/21: On November 19th, 2021, the Build Back Better bill passed a vote from the United States House of Representatives. Now the bill heads to the Senate for their vote.

The proposed EV tax credit for 2022 has the potential to be evolutionary. As part of the still being negotiated Build Back Better Act, substantial tax breaks for owners of electric and plug-in hybrid vehicles are on the table. And while the final version of the Build Back Better Act is still being ironed out, we do have insight into what is likely going to pass.

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 go up 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.

Thinking about buying an extended warranty? Get a free quote from YAA first!

Let’s break down the proposed 2022 EV tax credits. This page will be updated frequently as the Build Back Better Act evolves.

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. Congress is mulling over passing the Build Back Better Act, which would increase the maximum electric vehicle tax credit to $12,500 in 2022. Here’s how you would qualify for the maximum credit:

  • $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 the Build Back Better Act would reset this for Tesla and GM (who have currently passed this threshold) 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

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 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 issues with its older Bolt models, 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 the Build Back Better Act EV tax credits.

Ford Lightning federal tax credit 2022

🔧 Protect your wallet

🎉 On average YAA saves you more than $1,500 🎉

Receive your FREE extended warranty quote.

🙅‍♀️No gimmicks. No BS. No robocalls.🙅‍♀️

📨 FREE Newsletter

Hate spam? So do we. One email per week. That's it.

🆘 Connect with an expert

Get advice from real people who know car buying inside and out.
car buying coaches

Not sure where to begin?

Take a look at our curated 'Start Here' resources or explore and ask questions in the community forum
Car Dealer Doc Fee by State 2021

Car Dealer Doc Fee by State 2021

The price of a car is never what it seems. There's the selling price, the fees, the add-ons, and taxes. When it's all...

23 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

Submit a Comment

Your email address will not be published. Required fields are marked *

Share This

Share This

Share this post with your friends!