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The new EV federal tax credit has more restrictions and regulations than the original version. This EV tax credit is part of the Inflation Reduction Act and spells out the requirements for EVs to qualify for the credit. Unfortunately, the price restrictions and original vehicle definitions disqualified some electric SUVs from qualification, but that has recently changed.

What’s changed to allow more electric SUVs to qualify for the EV tax credit?

Bloomberg reports the Treasury Department recently said it would begin to use the EPA fuel economy labeling to define whether a vehicle is an SUV or a passenger car. The initial Treasury department definitions caused some electric SUVs to be disqualified from the tax credit. This occurred because the price was more than $55,000, and the vehicle was defined as a passenger car.

Under the Inflation Reduction Act, electric SUVs and trucks priced up to $80,000 qualify for the credit. Passenger cars must be priced at $55,000 or lower. The SUV market offers widespread sizes, prices, and vehicle types, which makes a hard definition difficult to apply.

Automakers pushed for this change to allow electric SUVs to qualify

A white 2023 Ford Mustang Mach-E is parked in a driveway.
The 2023 Ford Mustang Mach-E | Ford

Automakers, including General Motors and Stellantis, pushed for a change to the definition of an SUV. It seems a bit odd that one government agency, the EPA, would have a different classification for vehicles from another federal agency, the Treasury Department.

With this change, some models that will now qualify for the EV tax credit include the Cadillac Lyriq, higher trims of the Ford Mustang Mach-E, and the Tesla Model Y. All three of these vehicles would not have qualified under the previous definition of SUVs.

Are EV tax credit qualifications retroactive?

Yes, the new EV federal tax credit started on January 1, and vehicles purchased since that date that was previously denied credit will now receive these tax credits. This adjustment allows many more electric SUVs to qualify, which could entice more consumers to choose a qualifying electric SUV that costs more than $55,000.

Which electric vehicles qualify for the federal EV tax credit?

Silver Cadillac Lyriq
Cadillac Lyriq | Cadillac

Under the new terms and definitions of electric SUVs, the following EVs qualify for the new credit.

  • Cadillac Lyriq
  • Chevrolet Bolt EV and EUV
  • Ford F-150 Lightning
  • Ford Mustang Mach-E
  • Ford E-Transit
  • Nissan Leaf
  • Rivian R1T
  • Rivian R1S
  • Tesla Model 3
  • Tesla Model Y
  • Volkswagen ID.4

You might wonder why other EVs aren’t on the list. While some EVs could fall within the price restrictions, not all meet other qualifying factors to receive the EV tax credit.

In addition to the EVs listed, a select number of PHEVs also qualify for these credits. These models are:

  • Audi Q5 e Quattro
  • BMW 330e
  • BMW X5 xDrive45e
  • Chrysler Pacifica PHEV
  • Ford Escape PHEV
  • Jeep Grand Cherokee 4xe
  • Jeep Wrangler 4xe
  • Lincoln Aviator Grand Touring
  • Lincoln Corsair Grand Touring
  • Volvo S60 Recharge, T8 Recharge

Could these electric SUV benefits have a short lifespan?

A white 2023 Tesla Model Y small electric SUV is parked.
The 2023 Tesla Model Y | Tesla

Vehicle pricing is only one qualifying factor in determining whether or not an EV receives the federal EV tax credit. The Treasury Department plans to publish requirements for EV batteries and critical minerals that could modify the list of qualifying vehicles. These new requirements should be published in March.

Next, check out how to get tax credits for EV chargers, or learn more about the federal EV tax credit qualifications in this video below:


Your 2023 EV Federal Tax Credit Questions Answered