Clean Vehicle Tax Credit in 2025 (Amounts & Eligibility)

The clean vehicle tax credit helps eligible consumers reduce the cost of purchasing a qualified new or used electric vehicle (EV) or plug-in hybrid. This federal tax credit offers up to $7,500 for new EVs and up to $4,000 for used models.

Rules differ for new versus used vehicles, and not all EVs qualify. Understanding the clean vehicle tax credit requirements in advance can help you maximize the credit and avoid missing out on savings (Learn More: Buying Auto Insurance For a New Car).

Keep reading to check if your specific vehicle is eligible. To see if local incentives apply in your area, enter your ZIP code.

The Clean Vehicle Tax Credit Explained

The clean vehicle tax credit is a federal incentive designed to encourage the purchase and use of environmentally friendly vehicles. It provides eligible consumers with a nonrefundable tax credit that can reduce their federal income tax liability by up to $7,500 for new vehicles and up to $4,000 for qualifying used ones.

This credit is available to individuals who meet certain income and vehicle eligibility requirements. It aims to make clean vehicles more accessible and affordable for everyday consumers. By supporting the adoption of electric vehicles (EVs), the credit plays a key role in the broader national effort to transition toward cleaner transportation options and combat climate change.

Read More: Is auto insurance tax deductible?

How to Qualify For The Clean Vehicle Tax Credit

To claim the clean vehicle tax credit, both the buyer and the vehicle must meet specific eligibility criteria set by the IRS and the U.S. Department of Energy. These guidelines ensure the credit supports truly clean, domestically assembled vehicles and reaches buyers across a range of income levels.

Clean Vehicle Tax Credit Requirements & Eligibility

Drivers must purchase the vehicle for personal use — not for resale — and primarily use it within the United States. Vehicles must also meet detailed qualifications, stay within specific MSRP limits, and meet battery component and critical mineral sourcing requirements.

To ensure the clean vehicle tax credit benefits everyday consumers rather than high-income households or luxury car buyers, the program includes strict income and vehicle price limits. Income is verified through tax returns.  The IRS and the Department of Energy review these rules every year and publish updated lists of eligible vehicles to help buyers make informed decisions.

Read More: Compare Auto Insurance Rates by Vehicle Make and Model

How to Apply For The Clean Vehicle Tax Credit

Claiming the EV tax credit involves submitting the correct clean vehicle tax credit form and ensuring all qualifications are met during the tax year.

Eligible buyers must complete IRS Form 8936 and include it with their federal tax return. This form requires specific information about the vehicle, including the Vehicle Identification Number (VIN), the date of purchase, and documentation that confirms eligibility.

Drivers still need to meet income and vehicle eligibility requirements, even when using the credit at the time of sale. Keeping a copy of the purchase agreement and any manufacturer certifications is also recommended, in case the IRS requires additional verification.

Read More: Best Auto Insurance For Hybrid Cars

How Much You Can Save With the Clean Vehicle Tax Credit

Along with the best auto insurance discounts for electric cars, the clean vehicle tax credit can help you save money. For new vehicles, the maximum tax credit available is $7,500. This amount is divided into two equal parts: $3,750 is awarded if the vehicle meets critical mineral sourcing requirements, and the other $3,750 is granted if the battery components meet specific domestic production standards.

For used electric or plug-in hybrid vehicles, buyers may be eligible for a tax credit of up to $4,000, or 30% of the vehicle’s sale price, whichever is lower. However, the used vehicle must be at least two years old, purchased from a qualified dealer, and priced at $25,000 or less.

Not all new vehicles qualify for the full amount, as eligibility depends on the vehicle’s compliance with these technical and sourcing criteria. The actual clean vehicle tax credit amount received also depends on the buyer’s tax liability, since this credit is nonrefundable.

As clean vehicle technology continues to evolve and incentives become more accessible, especially with the introduction of clean vehicle tax credit calculators at dealerships, now may be the perfect time to make the switch. To explore eligible vehicles and EV auto insurance rates in your area,  enter your ZIP code.