Understanding 2025 EV Tax Credit Changes
What to Know About the 2025 EV Tax Credit Changes
Are you considering purchasing an electric vehicle (EV) or plug-in hybrid electric vehicle (PHEV) in 2025? If so, it's important to be aware of the changes to the federal EV tax credit that will take effect this year. These modifications, part of the Inflation Reduction Act, will impact which vehicles are eligible for the credit and how much you can potentially save on your EV purchase.
Eligibility Requirements for EVs and PHEVs
One of the most notable changes is that only EVs and PHEVs assembled in North America will qualify for the tax credit. This is a shift from the current rules, which allow vehicles manufactured outside North America to be eligible. The goal is to incentivize automakers to establish EV production in the U.S., creating American jobs.
In addition, there will be new restrictions based on the vehicle's manufacturer's suggested retail price (MSRP). For cars to be eligible, the MSRP cannot exceed $55,000. For trucks, vans, and SUVs, the limit is set at $80,000. This aims to make the tax credit more accessible to a broader range of consumers and steer the incentive towards more affordable EVs.
Another significant change relates to the buyer's income. To claim the full clean vehicle credit, your adjusted gross income cannot now exceed $150,000 for single filers, $225,000 for heads of household, or $300,000 for joint filers. If your income is above these thresholds, you will not be able to claim the EV tax credit.
Tax Credit Amount and Phase Out
Starting this year, the EV tax credit will be worth up to $7,500. However, the full credit will only be available for vehicles that meet certain domestic manufacturing requirements. EVs and PHEVs with battery components manufactured or assembled in North America will qualify for a $3,750 credit. An additional $3,750 will also be available if the vehicle also meets the critical minerals requirement, meaning a percentage of the battery's critical minerals were extracted or processed in the U.S. or a country with a free trade agreement with the U.S.
It's important to note that the EV tax credit will begin phasing out once 50% of U.S. passenger vehicle sales consist of EVs. At that point, the credit amount will be reduced by 50% for one year, then 25% for the following year, before being phased out entirely. This means that if you're planning to purchase an EV, it may be advantageous to do so sooner rather than later to maximize your potential savings.
What This Means for You
If you're looking to buy a new electric vehicle this year, it's important to do your research and understand how the new tax credit changes will impact your purchasing decision. Make sure to choose an appropriate vehicle that meets the eligibility requirements, including being assembled in North America and falling within the current price limits.
Keep in mind that the income restrictions may affect your ability to claim the credit. If you're unsure whether you qualify based on your income level, consult with a tax professional for guidance.
Take Advantage of Our EV Tax Credit
At Porsche Stratham, our team is here to help you navigate the EV landscape. That means finding the perfect electric vehicle within our wide selection of eligible EVs and PHEVs and understanding how the tax credit changes apply to your situation.
Visit our dealership in Stratham, NH, to explore our EV inventory and take a test drive. We're committed to making your EV purchase as easy as possible while helping you maximize your potential savings through the federal tax credit.
How Can We Help?
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Porsche Stratham
60 Portsmouth Ave.
Stratham, NH 03885
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