Electric vehicles (EVs) aren’t as cheap in the United States as they are in some European and Asian markets. However, the EV tax credit can lessen the financial burden of would-be electric car buyers by providing a tax incentive of $7,500 or $3,750. This year, the list of vehicles that qualify for the $3,750 credit is quite short. Still, budget-minded buyers can redeem a credit on the cheapest electric car on the market, the Nissan LEAF S.

Only a handful of modern EVs qualify for the $3,750 federal tax credit in 2024

The federal EV tax credit applies to battery electric vehicles (BEVs) under a specific price point. Vehicles can qualify for either $7,500 or $3,750, depending on factors like income and MSRP. For instance, vans, trucks, and SUVs can cost up to $80,000, while car models have a $55,000 limit. 

According to Electrek, vehicles must meet specific domestic production requirements to qualify for the $3,750 federal tax credit. For instance, new EVs must have at least 50% battery componentry from the United States or a U.S. free trade partner. The same goes for the vehicle’s battery-critical materials. However, those percentages may rise in 10% increments every year through 2029.

As such, many EVs either don’t qualify for any federal tax incentive. Conversely, a greater number of production EVs qualify for the full $7,500 tax credit than the half credit. For instance, the Ford F-150 Lightning, Honda Prologue, Tesla Model 3 Long Range, and Volkswagen ID-4 qualify for the full credit. However, the Tesla Model S’s MSRP exceeds the limit for EV sedans. As such, the luxury EV doesn’t qualify for a credit like the Model X Long Range SUV. 

In addition to production requirements, buyers must meet requirements as well. For instance, a buyer can’t have an adjusted gross income of over $75,000, or $112,500 as a head of household.

Source: Electrek