How EV Incentives Work

Dave Nichols
Sep 2022
Time to read:
Besides the federal credit for new electric vehicles, there are also many supporting benefits from state and local government. Want to learn how EV incentives work? Here’s what you need to know.
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Federal EV Credit

You’ve probably heard of the federal tax credit - which gets you up to $7,500 on certain plug-in hybrid and all-electric vehicles.

In August 2022, Congress passed new legislation – the Inflation Reduction Act of 2022 – which changes credit amounts and eligibility requirements for clean energy vehicles, including electric vehicles and plug-in hybrids.

Under the new provisions, up to $7,500 is available for new electric vehicles , and there is now a credit of up to $4,000 for used electric vehicles, which can make buying an EV even more affordable for some drivers. However, price caps are in place: passenger cars priced at over $55,000 and vans, trucks, and SUVs priced at over $80,000 are no longer eligible for credits.

Under the new Act, only vehicles whose final assembly is completed in North America qualify for clean energy vehicle credits. This means that many vehicles that previously qualified for clean energy incentives are no longer eligible.

Further complicating the issue is that some models are built in multiple locations, meaning some vehicles of the same nameplate meet the final assembly requirement, while others do not. The Department of Energy has a list of model year 2022 and early model year 2023 electric vehicles that may meet the final assembly requirement here (

State and Local EV Incentives

Many states and local governments also have programs to help get you into a more fuel-efficient vehicle. These incentives come in the form of state tax credits, rebates, reduced vehicle taxes, and even exemptions from inspection fees and registration fees.

California has the most EVs of any state, they also offer the most support for those who are interested in driving green. The state’s Clean Vehicle Rebate Project can get California residents an additional $7,000 in state incentives.

To find out what incentives are available in your state, visit the U.S. Department of Energy’s list of state EV incentives here.

Local Utility Incentives

Many local electric utility companies are jumping on the EV bandwagon, offering incentive programs for new EV owners. Some companies offer a rebate of as much as $2,500 to customers who purchase an EV and home charging station. Others offer a discount on electric rates for charging your EV outside of peak hours.

Interested in a specific EV and want to know which incentives you qualify for? Use our EV Incentives Tool right here on GreenCars.

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