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Published: Jan 03, 2023 6 min read
Photo illustration of an electric car being charged by tax credits
Money; Shutterstock

New year, new EV? Expanded tax credits for electric vehicles and plug-in hybrids that went into effect at the start of 2023 could save you thousands of dollars.

In August, President Joe Biden signed into law the Inflation Reduction Act, a major climate and tax spending package. A key provision in the sprawling legislation aims to make electric vehicles more affordable by revamping how EV tax credits work.

A big expansion to the tax credit is in effect as of Jan. 1, 2023. In short, the law provides tax credits of up to $7,500 for certain new electric cars and up to $4,000 for used EVs. Income caps for buyers also apply: $150,000 a year for singles (or $300,000 for couples) purchasing new EVs and $75,000 for singles (or $150,000 for couples) purchasing used EVs.

However, complex restrictions on what vehicles may qualify for the tax credit — as well as how the tax credits are applied in their first year — can complicate the buying process.

Eligibility for 2023 EV tax credits