Expert Insights

What Hybrids Qualify for Federal Tax Credits?

Laurance Yap
January 10, 2024
While you probably have heard of the $7,500 federal tax incentive for electric cars, did you know it also applies to plug-in hybrids? Here's a list of plug-in vehicles that could save you thousands at purchase.
Jeep Wrangler 4xe hybrid charging by a garage

Plug-In Hybrid Tax Credits

Many car shoppers know that the federal government provides up to $7,500 in tax credits for certain electric vehicles, provided that they meet certain requirements for North American production, battery components, and battery minerals – and that, if they don’t meet all of the requirements, some vehicles may get $3,750. But what some shoppers don’t know is that the same credits are also available for plug-in hybrid vehicles.

For many drivers, who regularly take long trips, or need the additional flexibility provided by the option of switching to gasoline when needed, a plug-in hybrid is a great choice. You can do most of your daily driving emissions-free, and plug in to charge overnight to “fill up” for pennies. But if you do have to take a longer drive, a gasoline engine provides the range and convenience you need without long charging stops.

Much like the list of EVs eligible for the incentive is shorter than it used to be – based on tightening restrictions around the sourcing of minerals – the list of plug-in hybrids eligible for the full $7,500 incentive is shorter than it was. But there are a number of vehicles still eligible for thousands in government discounts – and in 2024, it’s much easier to obtain the incentives, as dealers can apply them right at the time of purchase.

Family spending time by their Chrysler Pacifica Hybrid

Chrysler Pacifica Hybrid, $7,500 Incentive

America’s love affair with the SUV means that there are very few minivan options available these days, with only four companies selling new vans in 2024. Only the Toyota Sienna and Chrysler Pacifica offer hybrid options – and only the Pacifica is a plug-in. While the current Pacifica is feeling its age a bit – it came to market in 2017 – it still has lasting appeal for families, and is the only plug-in hybrid to be eligible for the full $7,500 federal tax incentive thanks to its battery capacity and all-electric range.

Compared to the more conventional hybrid Sienna, the plug-in Pacifica has the ability to drive up to 32 miles in all-electric mode. This means that if you plug in overnight, you can do most of your daily commuting without using any gas; it’s the most electrified minivan out there, and once you’ve exhausted its electric range, the Pacifica is still an upscale, comfortable gas-powered family hauler.

2024 Pacifica Hybrid models have a starting MSRP of $54,825 (including freight) – and for that money you get one of the only plug-in vehicles on the market available with three rows of seats, and the only one that can fit adults in the third row and still pack in a lot of cargo. And while the starting price is high, no other minivan offers a plug-in option – and there’s that juicy federal tax rebate to offset the cost.

While some aspects of the Pacifica, like its analog gauge cluster, large buttons, and previous-generation infotainment system, are not the most current, it is a very easy vehicle to use and live with, but there’s nothing quite like it on the market.

Jeep Grand Cherokee 4xe driving on the road

Jeep Grand Cherokee 4xe, $3,750 Incentive

The latest-generation Jeep Grand Cherokee now offers a 4xe plug-in hybrid powertrain that delivers 25 miles of all-electric range and 56 MPGe according to the EPA. The plug-in model was introduced alongside the latest generation gasoline models, and all are built on a brand-new architecture that moves a notch up in size; the Grand Cherokee is now on the verge of being full-sized. The starting MSRP is $61,660 before options, and the Grand Cherokee 4xe is eligible for a $3,750 federal rebate.

In fact, four plug-in hybrid Grand Cherokee trims are available. There’s a “base” 4xe, an off-road focused Trailhawk 4xe, luxurious and rugged Overland 4xe, and the top-of-the-line Summit 4xe. All four versions have two electric motors, a 400-volt battery pack, and a 2.0-liter turbocharged four-cylinder engine and eight-speed automatic transmission. Total system output for the Grand Cherokee 4xe models is 375 hp and 470 lb.-ft. of torque. Under the rear floor, a 17-kWh battery provides a full-electric driving range of 25 miles – and is protected by a series of skid plates to keep it safe during off-roading. Three driving modes let you set up the hybrid powertrain for commuting, off-roading or long-distance travel.

Inside, the Grand Cherokee has a gorgeous, next-generation interior with impressive materials and the latest tech. There are twin 10.1-inch digital screens, one for the instrument cluster and another one for the infotainment system, and there’s even an available front passenger screen and a high-res rear-seat entertainment system with Amazon FireTV built in. Standard safety tech includes full-speed collision warning with active braking and pedestrian and cyclist detection; rear cross-path detection; adaptive cruise control; blind spot monitoring; parking assist; and more. You can also add a night vision system, intersection collision assist, drowsy-driver detection system, and a 360-degree surround camera system.

Jeep Wrangler 4xe hybrid

Jeep Wrangler 4xe, $3,750 Incentive

With a starting MSRP of $49,995 for the entry-level, but still exceptionally capable Sport S trim level, the Jeep Wrangler 4xe is very well-priced for a plug-in hybrid, and this fact, plus its rugged Jeep image and all-round versatility, has made it the best-selling plug-in hybrid in America for several years running.

The design of the Wrangler is iconic. With its distinctive seven-slot grille, circular headlights, and distinctive silhouette, it carries echoes of the original Jeeps built during wartime – but is packed with the latest technology, including up-to-date green credentials. The plug-in hybrid drivetrain offers a 2.0-liter turbocharged four-cylinder engine, a lithium-ion battery, eight-speed automatic transmission, and a total of 375 hp and 470 lb-ft of torque. Plug it in overnight, and you can travel up to 21 miles completely emissions-free, making much of your daily commute super-clean and economical.

Multiple driving modes let you cruise along in full-electric mode, silent and emissions-free; use hybrid mode to mix the gasoline engine and electric motor; and use charge model to use the engine to recharge the battery. Running on electric mode off-road provides an incredible level of control and precision along with powerful torque for the toughest trails. Higher-spec models even carry Jeep’s top “Trail Rated” 4x4 designation, only awarded to vehicles that can cross the legendary Rubicon Trail.

Lincoln Corsair Grand Touring driving on the road

Lincoln Corsair Grand Touring, $3,750 Incentive

A mid-sized luxury SUV packed with features and excellent efficiency, the Lincoln Corsair has been designed to attractive younger clients to the Lincoln brand with its blend of advanced technology and refined styling. While a turbocharged 2.0-liter four-cylinder delivers impressive economy, it’s the plug-in hybrid Corsair Grand Touring that posts the most impressive ratings, and is also eligible for $3,750 in federal rebates. The Corsair Grand Touring has a 2.5-liter naturally-aspirated four-cylinder engine, which combined with electric power to deliver 266 total hp, putting power to the ground through a standard intelligent all-wheel drive system. Total electric-only range is estimated by the EPA at 28 miles, and drivers can select a “Pure EV” mode for emissions-free driving.

We really like the Corsair’s luxurious interior, which is defined by a strong horizontal theme and features a 12.3-inch digital instrument cluster and 13.2-inch infotainment system. Amazon Alexa is built-in, and allows drivers and passengers to issue voice commands to control vehicle features as well as control other connected devices in the Amazon ecosystem, such as smart home devices.

What’s perhaps most impressive about the Corsair is its high level of tech. Lincoln claims that its ActiveGlide 1.2 driver assistance system offers features never seen before in the segment, including the ability to drive on certain stretches of highway hands-free at up to 80 mph. ActiveGlide also features lane change assist, predictive speed assist, in-lane repositioning, and intersection assist. Mostly, these advanced features are only available only on the largest and most expensive SUV models, and the Corsair brings them to a new price point – starting MSRP is $53,385 for the plug-in hybrid Grand Touring.

What Hybrids Qualify for Federal Tax Credits?

While the list of plug-ins that are eligible for federal rebates is getting shorter, there are still great choices available. Keep in mind that you still need to meet eligibility requirements for new cars, including the following income caps:

  • $300,000 modified adjusted gross income if you’re married, and filing a joint tax return with your spouse;
  • $225,000 if you’re the head of your household
  • $150,000 if you’re a single tax filer

Remember that in 2024, licensed dealers can now apply the incentive as a discount on the price of the car, instead of you having to claim it at tax time.