The federal EV tax credit has no set expiration date, but it phases out for individual manufacturers once they sell 200,000 vehicles

The federal electric vehicle tax credit does not have a single important date that applies to all cars or all buyers. Instead, the credit phases out for each automaker separately once that company reaches 200,000 cumulative EV sales in the United States. Tesla and General Motors both hit that threshold in 2023 and lost the credit for new purchases, though used EV buyers can still claim it. Other manufacturers are approaching the limit at different rates, so the credit remains available for some brands but not others.

The credit itself—up to $7,500 per vehicle for new cars and up to $4,000 for used ones—was created by the Inflation Reduction Act, signed into law in August 2022. Congress did not write an expiration date into the law, which means the credit will continue until Congress votes to end it or modify it. That could happen at any time, but there is no scheduled sunset date on the books right now.

Key Takeaways

  • The federal EV tax credit phases out per manufacturer once they sell 200,000 vehicles, not on a calendar date.
  • Tesla and General Motors no longer may have access to for the credit as of 2023, but used EV purchases from any brand can still claim up to $4,000.
  • New EV models must also meet price caps and domestic content rules to may have access to, and these rules tighten each year.
  • Congress could change or end the credit at any time, but no expiration date is currently scheduled.
  • The credit is claimed on your federal tax return, not at the dealership, unless you choose to transfer it to the dealer at purchase.

How the 200,000-vehicle threshold works

When an automaker reaches 200,000 cumulative EV sales in the United States, the credit phases out over two calendar quarters. During the first quarter after the threshold is hit, the credit drops to 50 percent of its original value. In the second quarter, it drops to zero. This means if a manufacturer crosses 200,000 sales in March, the credit would be 50 percent in April, May, and June, then zero starting July 1.

Tesla crossed the threshold in the third quarter of 2023, so the credit became 50 percent in October 2023 and dropped to zero on January 1, 2024. General Motors hit 200,000 sales in the fourth quarter of 2023, making the credit 50 percent starting January 1, 2024, and zero starting April 1, 2024. Ford, Volkswagen, BMW, and Hyundai are still below the threshold, though Ford is approaching it. The IRS publishes a running list of which manufacturers have crossed the line and when the phase-out applies.

Price and domestic content rules that tighten each year

Even if a manufacturer has not hit 200,000 sales, a new EV must meet price caps and domestic content requirements to may have access to for the credit. These rules get stricter every year. For 2024, a new sedan cannot cost more than $55,000 and an SUV cannot exceed $80,000. The vehicle must also contain a minimum percentage of battery components and critical minerals sourced or processed in North America—currently 50 percent for battery components and 50 percent for critical minerals, rising to 100 percent by 2029.

Many popular EV models have been cut from the credit list because they exceed the price caps or do not meet the domestic content rules. Porsche, Audi, and some Tesla models are no longer may be able to access for this reason. If you are shopping for a new EV, check the IRS list of vehicles that currently may have access to before you buy, because the rules change annually and a car that may have access to last year may not may have access to this year.

Used EV purchases and the $4,000 credit

The used EV credit is simpler and has fewer restrictions. You can claim up to $4,000 on a used electric vehicle if it costs $25,000 or less and was manufactured at least two years ago. The used credit does not phase out by manufacturer—it is available for any used EV that meets the price and age requirements, regardless of whether Tesla or GM made it.

The used credit also does not depend on domestic content or battery sourcing rules. Your household income must be below $300,000 (married filing jointly) or $150,000 (single), and you cannot have used the credit in the past three years. Unlike the new EV credit, the used credit cannot be transferred to the dealer—you must claim it on your tax return after you buy the car.

Claiming the credit on your tax return

For a new EV, you have two options. You can claim the full credit on your federal tax return the year you buy the car, or you can transfer the credit to the dealer at the time of purchase. If you transfer it to the dealer, they reduce the sale price by the credit amount, and you do not claim it later on your taxes. This option is useful if you do not expect to owe enough federal income tax to use the full credit.

If you claim the credit yourself on your return, you will need the vehicle identification number (VIN) and the manufacturer's certification that the car qualifies. The dealer should provide this information. You report the credit on Form 8936 and attach it to your Form 1040. The credit reduces your federal income tax dollar-for-dollar, so if you owe $5,000 in federal tax and claim a $7,500 credit, your tax bill drops to zero and you do not receive the extra $2,500 as a refund.

What could change the credit in the future

Congress could modify or end the EV tax credit at any time through new legislation. Proposed changes have included raising or lowering the price caps, adjusting the domestic content rules, changing the 200,000-vehicle threshold, or eliminating the credit entirely. None of these changes are scheduled, but they are possible if Congress votes to do so.

The credit could also be affected by trade policy or tariffs on vehicles and battery components. If tariffs on imported batteries increase, the domestic content rules may become easier to meet. If tariffs on foreign EVs rise, the price caps might shift. These are longer-term possibilities, not when ready threats, but they are worth monitoring if you are planning an EV purchase in the next few years.

Frequently Asked Questions

Can I still get the credit if I buy a Tesla or GM car right now?

No. Tesla lost the credit on January 1, 2024, and General Motors lost it on April 1, 2024. Both companies have crossed the 200,000-vehicle threshold. If you buy a used Tesla or GM EV, you may be able to claim the $4,000 used credit if the car meets the price and age requirements.

What happens if I buy a car that qualifies, then the rules change before I file my taxes?

The credit is determined by the rules in effect when you buy the car, not when you file your return. If you purchase a may have access to vehicle in 2024, you can claim the credit on your 2024 tax return even if the rules change in 2025. Keep your purchase documents and the manufacturer's certification letter.

If I transfer the credit to the dealer, do I lose money if the credit is worth more than the car's price?

Yes. If you transfer a $7,500 credit to the dealer but the car costs $6,000, the dealer reduces the price to zero and keeps the extra $1,500. You cannot claim the unused portion on your taxes. This is why transferring the credit works best when the credit amount is less than or equal to the vehicle price.

Does the credit expire if I do not use it the year I buy the car?

No. If you buy a car in 2024 but do not claim the credit on your 2024 return, you can claim it on your 2025 return or later. The credit does not expire after a certain number of years, though Congress could change this rule at any time.

Will the credit come back for Tesla and GM owners?

Not unless Congress changes the law. Once a manufacturer crosses 200,000 sales, the credit phases out permanently under current rules. Congress would need to vote to raise the threshold, reset the counters, or create a new credit structure for that to change.