Everything to Know About the EV Tax Credit

In the last decade or so, we’ve seen a renaissance in the auto industry—there are now more hybrid and electric cars available than ever before, and many of them come with a hefty available tax credit, which can save you thousands of dollars. 

However, there’s still a lot of confusion among shoppers. How does it work? Is the tax credit ending, and if so, why? If you’re thinking about buying an electric vehicle like the Cadillac LYRIQ, it’s crucial to understand all the ways you can save, and that’s why we put together this quick and simple guide. Read on to find out everything you need to know. 

What is the EV Tax Credit? 

First, let’s go through the basics. In the U.S., the federal government offers a tax credit on battery electric vehicles (BEVs), plug-in hybrid electric vehicles (PHEVs), and fuel cell electric vehicles (FCEVs). This credit was introduced, at least in part, to stimulate EV sales and offset the higher cost of the larger EV batteries. 

The total amount of the tax credit depends on a number of factors, including what kind of EV is being bought, whether the EV is new or used, how and where the EV was manufactured, and the annual earnings of the person claiming the credit. Sound complicated? Well, don’t worry, because it isn’t as hard as it seems. 

How Much is the EV Tax Credit? 

As of this writing, the max amount of money you can get back for a new EV is $7,500, while if you buy a used EV, the most you can get back is $4,000. 

Which Vehicles Qualify for the New EV Tax Credit? 

When shopping for a new EV, it’s important to research how and where it was manufactured, because this can have a major effect on how much of the tax credit you’ll be able to take advantage of. There are a few key requirements to consider: 

• General requirements: As a set of basic requirements, the vehicle must have a battery capacity of at least 7 kilowatt hours (kWh), a gross vehicle weight rating (GVWR) of under 14,000 pounds, and be made by a qualifying car manufacturer. 

• MSRP requirement: The vehicle’s manufacturer suggested retail price (MSRP) cannot be over $80,000 for vans, SUVs, and trucks. For other vehicles, MSRP can’t go over $55,000. 

• Final assembly requirement: The vehicle must undergo final assembly in North America. This info can be found on the vehicle’s window sticker or by using a VIN decoder online. 

• Critical minerals and battery component requirements: To get the full $7,500, the vehicle has to have both critical minerals and battery components sourced from specific places. 

• $3,750 for critical minerals from inside the U.S., or a U.S. trade partner that has a free trade agreement. 

• $3,750 for a certain percentage of the EV battery being assembled in North America. 

If you’re shopping for a new Cadillac EV for sale near Columbia, SC, you’re in luck—under these rules, there are a few models that qualify, including the LYRIQ, OPTIQ, and VISTIQ. However, it’s essential to note that not all models will qualify if their MSRP is over $80,000. 

To make sure you get the best price on the electric Cadillac you’re shopping for, contact our sales team today. 

Who Qualifies for the New EV Tax Credit? 

In addition to the new vehicle requirements, shoppers will also have to meet certain income and personal requirements for a new EV: 

• The vehicle can only be bought for personal use, and must be used primarily in the U.S. 

• Modified adjusted gross income (AGI) cannot be over: 

• $150,000 for single people filing for themselves 

• $225,000 for heads of households 

• $300,000 for married couples filing together 

What Are the Requirements for the Used EV Tax Credit? 

The tax credit requirements for a used EV are a bit different. Here’s a quick breakdown: 

• The vehicle must have a selling price of under $25,000. 

• The vehicle must be of a model year at least two years older than the year it’s bought in (i.e. if you’re buying in 2025, it’ll have to be a 2023 model year or older). 

• The vehicle must have a GVWR of under 14,000 pounds. 

• The buyer’s modified AGI must be under a certain amount. 

Are you looking for an affordable pre-owned EV? Browse our used vehicle inventory online, then contact us to ask about all the ways you can save. 

Is the EV Tax Credit Ending? 

Unfortunately, all good things must come to an end. The EV tax credit in the U.S. is set to end on September 30th, 2025. 

The good news is that this still leaves plenty of time to benefit from massive savings on a new or used electric vehicle. Just don’t delay, because as of now, there’s no telling when we’ll see major tax credits like this again. 

Shop Cadillac EVs in Columbia, SC 

With tax credits ending, there’s never been a better time to come to our Cadillac dealership near you and test drive a luxury EV. If you still have questions about the EV tax credit and how to take advantage of it before it goes away, contact us online or call us today at (803) 757-4503 and we’ll help you get the best deal available.