$7,500 federal EV tax credit: 2026 eligibility and how to claim

The Inflation Reduction Act of 2022 restructured the old plug-in tax credit into the modern Clean Vehicle Credit (Section 30D). In 2026, the full $7,500 is split into two equal $3,750 halves: one half for vehicles whose battery's critical minerals meet sourcing thresholds from the US or free-trade-partner countries, and one half for battery components manufactured or assembled in North America. A vehicle that meets only one of the two halves qualifies for $3,750; one that meets both qualifies for the full $7,500.

Since January 1, 2024, you can transfer the credit to a registered dealer at the point of sale. That converts the credit from a tax-time refund into an instant price reduction (or down payment) at the dealership — you do not need to wait until you file your return. To use the point-of-sale transfer, the dealer must be registered with the IRS Energy Credits Online portal, and you must attest in writing that you meet the income limits.

You qualify for the $7,500 federal EV tax credit if your modified adjusted gross income (MAGI) is at or below $150,000 (single filer), $225,000 (head of household), or $300,000 (married filing jointly), and the vehicle you buy is on the IRS list of qualifying clean vehicles and below the MSRP cap. You can use MAGI from the year of purchase or the prior year, whichever is lower.

• New EV income limits: $150,000 single / $225,000 head of household / $300,000 married filing jointly.
• Used EV income limits: $75,000 single / $112,500 head of household / $150,000 married filing jointly.
• Vehicle requirements: Final assembly in North America, on the IRS qualifying list, and under the MSRP cap for its body type.
• Use: The vehicle must be purchased for personal use (not resale) and primarily used in the United States.

The eligible vehicle list is maintained by the IRS and US Department of Energy and changes during the year as manufacturers update their battery sourcing. Always confirm a specific make, model, and trim on the official list before relying on the credit — eligibility can differ between trims of the same model, and the list is updated more often than third-party summaries.

• Official IRS / DOE list: fueleconomy.gov/feg/tax2023.shtml — search by make, model year, and purchase date.
• IRS clean vehicle credit page: IRS Credits for New Clean Vehicles — covers the legal definitions and dealer-transfer rules.
• Verify at the dealer: Ask the dealer to provide the time-of-sale report, which will show whether your specific VIN qualifies for the full $7,500, $3,750, or zero.

The IRA caps the manufacturer's suggested retail price (MSRP) of an eligible new EV: $55,000 for cars (sedans, hatchbacks, wagons), and $80,000 for SUVs, vans, and pickup trucks. For the Used Clean Vehicle Credit, the sale price must be $25,000 or less. There is no MSRP cap on commercial vehicles.

• Cars (sedans, hatchbacks, wagons): MSRP must be $55,000 or less.
• SUVs, vans, and pickup trucks: MSRP must be $80,000 or less.
• Used EVs: Sale price must be $25,000 or less, and the vehicle must be at least 2 model years old.
• Important: MSRP is the manufacturer's sticker, not the price you negotiate. A dealer markdown does not bring an over-cap car back into eligibility.

You claim the $7,500 federal EV tax credit by filing IRS Form 8936, Clean Vehicle Credits, with your Form 1040. You file Form 8936 whether you take the credit at tax time or transfer it to the dealer at point of sale — the form is also how you reconcile the dealer transfer.

1. Confirm eligibility on fueleconomy.gov and verify your MAGI is under the income limit.
2. Get the time-of-sale report from the dealer at purchase. This is the document that proves your VIN qualifies, and you will need it to file.
3. Choose your path: take the credit at tax time, or transfer it to the dealer for an instant price reduction. The dealer must be registered with the IRS Energy Credits Online portal to offer the transfer.
4. File Form 8936 with your Form 1040. Attach Schedule A of Form 8936 for each vehicle, and report any dealer-transferred amount on the appropriate line.

The credit is nonrefundable when claimed on your return, meaning it can reduce your federal tax liability to zero but will not generate a refund beyond that. The point-of-sale transfer is the exception: if you transfer the credit to the dealer, you receive the full benefit even if your tax liability is below $7,500 (provided you meet the income limit).

The Used Clean Vehicle Credit (Section 25E) is worth 30% of the sale price, capped at $4,000. The vehicle must be priced at $25,000 or less, must be at least 2 model years old, and must be purchased from a licensed dealer (private-party sales do not qualify). Income limits are stricter than the new-vehicle credit: $75,000 single, $112,500 head of household, $150,000 joint. A buyer can claim the used credit only once every three years.

The Commercial Clean Vehicle Credit (Section 45W) covers EVs purchased for business use. It is worth up to $7,500 for vehicles under 14,000 lbs gross vehicle weight rating, and up to $40,000 for heavier commercial vehicles. There are no MAGI caps and no MSRP caps. The credit is the lesser of (a) 30% of the basis (15% if the vehicle has a gas/diesel engine, as with plug-in hybrids), or (b) the incremental cost of the vehicle compared to a comparable internal-combustion vehicle.

The federal $7,500 credit stacks with most state and local incentives — they are administered by separate agencies and target different parts of the purchase. Many states offer rebates of $1,000 to $7,500, utility rebates for home charger installation, reduced registration fees, or HOV-lane access. See our EV incentives hub for state-by-state details, and the EV charging costs guide to estimate your total cost of ownership.

Note: a handful of state programs require you to apply before purchase or to take delivery before the federal point-of-sale transfer. Read the program rules carefully so the federal transfer does not disqualify you from the state rebate.