Battery electric and plug-in hybrid vehicles purchased in or after 2010 may be eligible for the US federal income tax credit of up to $7,500. The credit amount varies based on the capacity of the battery used to power the vehicle. All current Tesla models are (and the Model 3 will be) eligible for the initial full $7,500 credit. The Chevrolet Volt PHEV also qualifies for the full $7,500, for example, whereas the Ford Fusion Energi, is only eligible for a $4,007 credit.
See how the IRS calculates the available tax credit for each EV model.
The federal tax credit is phased out over time beginning the second quarter AFTER the quarter in which a manufacturer reaches a total of 200,000 BEV or PHEV vehicles sold since 2010. Here is how the phase out works:
Can You Actually Claim the Credit?
There are a few things to keep in mind when considering the purchase of an EV and qualification for the tax credit:
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