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Electric Vehicle Tax Credit FAQs

As buyers queue up to place a new Cadillac LYRIQ reservation or review CELESTIQ custom order options, they naturally have questions about how federal EV tax credits may apply to these new zero-emissions vehicles. We're here to shed some light on the topic, so take a read through the below electric car FAQs, then visit our Cadillac dealership near Ossining for further information.

Your Federal EV Tax Credit Questions Answered

01

How does the EV tax credit work?

You may qualify for a federal EV tax credit when you buy a new vehicle that meets certain criteria. The IRS has created specific guidelines to help consumers understand what models may be eligible for tax incentives, but generally, qualifying vehicles must:

  • Feature a battery capacity of at least 7 kWh
  • Have a gross vehicle weight rating of less than 14,000 pounds
  • Undergo final assembly in North America
  • Have an MSRP of no more than $55,000 (cars) or $80,000 (SUVs, vans, trucks)
02

How much is the EV tax credit worth?

You can enjoy a tax credit of up to $7,500 with the purchase of a qualifying vehicle. Unlike a deduction, a tax credit will lower your tax burden dollar-for-dollar, which means it can directly reduce how much you ultimately owe. As always, we encourage you to speak with a qualified accountant to learn more about how the clean vehicle tax credit may affect your tax bill.

03

Can you get a tax credit on a used electric car?

Yes. Thanks to the new EV tax credit changes incorporated into the Inflation Reduction Act, used electric cars may now qualify for tax savings. According to the Clean Vehicles Credit fact sheet, there are several stipulations dictating which used EVs may qualify, including:

  • Age. A vehicle must be at least two years older than the current calendar year when purchased. This means that an EV bought in 2023 must be no newer than the 2021 model year.
  • Price. The vehicle must have a sale price of $25,000 or less.
  • Income. Certain income limitations apply to the used EV tax credit depending on your filing status. Please visit our Cadillac dealership or speak with an accountant for more details.