New EVs have been popping up lately, including the 2023 Toyota bZ4X. The bZ4X will soon be available nationwide, and it boasts generous dimensions to suit more of your cargo or extra passenger needs. If you buy one soon, you’ll qualify for an EV tax credit.

How does the federal EV tax credit work?

According to Kelley Blue Book, the federal EV tax credit is available to anyone who purchases a plug-in hybrid (PHEV), fuel-cell car, or all-electric vehicle (EV). How much you receive depends on how much electricity the car’s battery holds. PHEVs generally qualify for less because they have smaller batteries and still run on some gasoline power.

The federal EV tax credit starts at $2,500 and maxes out at $7,500. You can get it only if your car is a new purchase, and you don’t get the credit immediately. You’ll be able to claim it when you file your federal income taxes in April.

The 2023 Toyota bZ4X is eligible for the federal EV tax credit — for now

The Toyota bZ4X still qualifies for a portion of the tax credit, but the vehicle has already hit its 200,000th sale. Once an automaker sells that many EVs, the federal EV tax credit is gradually reduced, Car and Driver explains. If you order a 2023 Toyota bZ4X now, you’ll get only $3,750 back.

The Verge reports that the credit will be halved again next April to $1,875. By October 2023, the credit should be phased out completely. As of now, Tesla and General Motors have also been wiped out of EV credits.

Is the 2023 Toyota bZ4X worth over $40,000?

Without the full federal EV tax credit, the 2023 Toyota bZ4X starts at $42,000 for the XLE trim. It comes standard with a single-motor front-wheel-drive setup, producing 201 hp and traveling 252 miles on electric power. Upgrading to the dual-motor battery gets you all-wheel drive but gives you only a minimal power increase (214 hp).

Toyota also advertises X-Mode for the AWD models, an enhanced traction control system. At the press of a button, the car’s tires automatically adjust themselves to keep from slipping in snow or mud. It also has low-speed grip control for light off-roading and a downhill assist function.

However, the 2023 Toyota bZ4X AWD’s range is reduced to 228 miles. Both battery packs can be fully charged in nine hours when plugged into a Level 2 port. With fast charging, it needs about one hour to replenish 80% of the battery.

This electric SUV can seat five riders on synthetic leather seats accented by fabric trim. Toyota delivers on its promise of “abundant legroom,” with nearly three feet of it in the second row. Front-seat riders have 42 inches of legroom, and everyone can enjoy the panoramic sunroof.

The infotainment system has a wide 12.3-inch screen and features wireless smartphone integration. On the Toyota bZ4X Limited, you get an aerial-view camera system and a premium JBL audio system. Heated and ventilated front seats are also standard on this trim.

In addition, the Limited model rides on 20-inch wheels instead of the standard 18-inch, but its range estimates are slightly lower. The FWD version starts at $46,700.

The Toyota bZ4X looks promising, but its low range estimates might not impress some buyers. In comparison, the Ford Mustang Mach-E gets up to 305 miles of range. It’s priced similarly to the bZ4X and still qualifies for the full EV tax credit.