How The Federal EV Tax Credit Amount is Calculated for Each EV

Have you ever wondered how the IRS determines the credit amount assigned to each EV for the available Federal EV tax credit? And why is it that the Chevrolet Volt, a plug-in hybrid with 53 miles of electric range qualifies for the same $7,500 credit as for a Tesla with over 300 miles of range?

The answer is in a simple formula that the IRS uses that is based on the size of the battery pack. The formula is as follows:

  • A. $2,500 for a minimum of a 5kWh battery pack
  • B. + $417 for all battery packs
  • C. + $417 per kWh of a battery pack in excess of 5 kWh
  • Federal tax credit amount then = A + B + C – but the amount is capped at $7,500.

To see the available tax credit amount for every EV in the US, visit this FuelEconomy.gov site. (see sample screenshot below)

Sample Screenshot from FuelEconomy.gov