2025 EV Tax Breaks

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2025 EV Tax Credit: What You Need to Know

EV Tax 2025

With the electric vehicle (EV) market steadily growing, the updated federal tax credits for 2025 offer significant savings for buyers willing to go electric. The Inflation Reduction Act has revamped how these incentives work, making it increasingly desirable for manufacturers to produce EVs domestically. Here’s a breakdown of what buyers can expect from the 2025 EV tax credits.

Credit Basics

The federal government provides a credit of up to $7,500 for qualifying new EVs. This incentive helps bridge the gap between EVs and traditional gas-powered cars, offsetting some of the initial costs.

Qualifying

For 2025, vehicles must meet several criteria to qualify for the full tax credit:

  • Assembly: Final assembly must take place in North America.
  • Battery: At least 60% of the battery components need North American origin, and the critical minerals should come from the U.S. or free trade partners.
  • MSRP: Cars must be priced below $55,000, while SUVs, trucks, and vans must not exceed $80,000.

Moreover, there are income limits for individuals looking to qualify:

  • Single Filers: AGI below $150,000.
  • Heads of Household: AGI under $225,000.
  • Joint Filers: Must earn below $300,000.

The vehicle needs to be used primarily in the U.S. for personal purposes to meet the criteria.

Eligible EVs

For a full credit in 2025, options include vehicles like the 2024-2025 Acura ZDX, 2024-2025 Cadillac Lyriq, and the 2025 Tesla Cybertruck, among others. As always, confirm specific trims and configurations to ensure eligibility.

Used EV Credit

For used EVs, a $4,000 credit is possible, provided the car costs $25,000 or less and is at least two years old. Buyers must purchase from a licensed dealer, and have an AGI below set thresholds, like $75,000 for single filers.

Claiming It

Starting 2024, buyers can apply the credit at dealerships, slashing the EV’s purchase price on the spot. Alternatively, it can be claimed while filing taxes with IRS Form 8936.

The 2025 EV tax credits provide a promising opportunity to make EV ownership more affordable, not to mention environmentally friendly. Staying informed about these incentives ensures that potential buyers can capitalize on these financial benefits effectively.

For the latest details on vehicle eligibility, consult the IRS Clean Vehicle Tax Credits page.

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