If you’ve earned a federal tax credit when you buy an electric car at the dealership, congratulations! But you’re not done yet.
You still need to claim that credit on your annual taxes, using Clean Car Credit Form 8936 and the form’s Schedule A, H&R Block tells PCMag. However, if you have received the loan but your annual income exceeds the eligibility limits, you may have to repay part of it.
“The taxpayer will have to repay a portion of the credit to the IRS if the modified adjusted gross income exceeds the applicable limit,” H&R Block says. “Taxpayers may not know if this will happen at the time the credit is transferred.”
To qualify for the full $7,500 credit or $3,750 half credit, you must have income below $150,000 for individuals, $225,000 for head of household, and $300,000 for married or filing jointly. Here is a list of EVs eligible for the loan in 2024, with some new additions for 2025.
In 2024, the Treasury Department issued more than 250,000 new clean vehicle tax credits, thanks in part to a policy change that allowed dealers to apply the rebate at the point of purchase. No need to wait for a refund at tax time.
But car dealers aren’t tax professionals, so even if they hand out loans like candy, it’s important to know your reporting responsibilities. The dealer also has some work to do. They must fill out their own forms to report the credit transfer to the IRS and give you the proper information to report it on your return as well.
Despite the popularity of the EV tax credit, President Trump has said he plans to get rid of it, likely through Congress. On his first day in office, he rescinded two executive orders intended to encourage EV adoption, one that tightened EPA emissions and another that disbursed funds for a nationwide charging network.
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Removing the credit could slow demand and hamper the ability of U.S. automakers to scale their operations and compete abroad, particularly in China and Europe, where electric vehicles are more popular. Many have made multimillion-dollar investments in US EV factories, including in red states, which has led to some bipartisan opposition to Trump’s EV rollback. New York Times reports.
However, not all automakers are upset about the policy changes. Stellantis, which owns Dodge, Jeep, Ram, Chrysler, has had a turbulent time during the recent EV push. It has not found success with any of its pure EV launches, and its former CEO, Carlos Tavares, resigned in December. In a statement, Stellantis said, “President Trump’s clear focus on policies that support a strong and competitive manufacturing base in the United States is extremely positive.”
The Fiat 500e convinced me that small, low-range EVs have a place in the US
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About Emily Forlin
Senior reporter
