You know that moment when someone says, “Hey, you can get a tax credit for that,” and you nod like you totally understand taxes? But inside, your brain is quietly doing the SpongeBob-in-a-burning-office routine? Yeah. That was me. EV tax credits? Felt like trying to understand quantum physics with a hangover.
But I did it. I figured it out (mostly). And I’m here to spill the very unboring tea.
So, what ARE EV tax credits really?
Okay, focus keyphrase time: EV tax credits.
In human speak, they’re basically the government’s way of saying, “Hey buddy, nice job trying to save the planet. Here’s some money back.”
The full deal is: if you buy a qualifying electric vehicle (keyword qualifying — we’ll come back to that) you can get up to $7,500 knocked off your federal tax bill. Not a refund check, not a discount at the dealership. A straight-up subtraction from what you owe in taxes.
Confused already? Same.
Quick Note Before You Go EV Shopping Like a Maniac
Not all EVs qualify.
That’s the annoying part. Some cars that used to qualify don’t anymore because of weird rules around where the battery is made, how much stuff is mined in the U.S., whether the car was built on a Tuesday while Mercury was in retrograde (kidding. I think).
So before you fall in love with that shiny new EV, check the list of qualifying vehicles. The IRS actually has a page for that. I know, I know — the IRS and “fun website” are not normally in the same sentence. But it’s a must. Check it here.
Real Talk: How Much Can You Actually Save?
Up to $7,500 from the federal government. That’s the big number they advertise like it’s Oprah giving away cars.
BUT—here comes the fine print.
1. You gotta have a tax bill big enough
If you owe $5,000 in taxes, you don’t magically get $7,500. You get…$5,000 off your tax bill.
No rolling over credits. No refunds. It’s more like, “Congrats, you owe the IRS nothing now. See you next year.”
I know someone who made the mistake of thinking they were getting a check for seven grand. They already had a vacation planned. Reader, that trip did not happen.
2. Income limits are a thing
Oh joy, more rules. Basically, if you make too much money, they think you don’t need the help. (Rude?)
For 2025:
- Single filers: can’t make more than $150,000
- Married filing jointly: $300,000 max
- Heads of household: $225,000
So if you’re pulling in a six-figure salary and sipping $9 oat milk lattes daily, just double-check you qualify.
Bonus Round: The State EV Rebates (a.k.a. Local Flavor)
This part? Wildly inconsistent.
I live in Colorado, and I got an extra $5,000 off just for living here and being mildly granola. California folks are out here getting rebates, HOV lane access, maybe even an edible arrangement. Meanwhile, in some states, you get…a pat on the back.
It’s worth checking your state incentives. Try websites like Plug In America or Energy.gov and search by ZIP code.
If your DMV site gives you a migraine (which, fair), these are a godsend.
Used EV Tax Credit: Wait, That’s a Thing Now?
Yes! Thank the EV gods. If you’re buying a used electric vehicle from a dealership (important!), you might be eligible for up to $4,000 or 30% of the sale price (whichever is lower).
Requirements:
- Vehicle must be at least two years old
- Sale price under $25,000
- Bought from a licensed dealer (sorry, Facebook Marketplace weirdos)
- Income caps: $75k for single, $150k for married
This is huge because used EVs are finally flooding the market. And honestly, who doesn’t love a good used-car treasure hunt?
Wait, Do I Need To Fill Out Something Weird?
You bet. It’s the IRS, after all.
You’ll need to file Form 8936 when you do your taxes. The dealership should give you a copy of the vehicle’s eligibility info (VIN, manufacturer cert, etc.), but always double-check.
Some people do their taxes and completely forget this step. That would be…tragic. Don’t be them.
What About Leased EVs?
Here’s the plot twist: If you lease an EV, the dealer usually claims the credit, not you.
BUT if they’re nice (and ethical), they might pass that savings along to you in the form of lower lease payments. Ask them. Be annoying about it.
“Hey, are you passing the EV tax credit savings onto me, or are you buying yourself a new espresso machine with it?”
Actual thing I said.
TL;DR: What You Should Remember (Even If You Read Nothing Else)
- Federal EV tax credit = up to $7,500 (not a check, not guaranteed)
- You need to owe that much in taxes
- Your income has to fall below the limits
- Car must be on the approved list (IRS website is your friend now)
- States may give you more $$$ (if you live somewhere cool)
- Used EVs get up to $4,000 credit
- Leasing? Dealer keeps the credit (but ask about discounts)
So…Was It Worth It?
For me? Absolutely.
I got $7,500 federal + $5,000 from Colorado. $12,500 off a car that runs on electrons and sass? Yes please.
Plus, I’ve probably made it 3.2% more bearable to breathe in traffic.
But also, I learned a lot. Mostly that adulting means reading IRS forms and asking strangers awkward tax questions while your dog eats your W-2s.
So yeah. Worth it.
Just triple-check everything before you start planning your Bali vacation with your “refund”.
