10 Electric Cars and Hybrids That Could Lose Their Federal Tax Credits

Some of our favorite EVs won't be eligible if the new IRA bill passes.

hyundai ioniq 5
Hyundai

As July wound to a close, Democrats in Congress reached a surprise deal with foot-dragging Senator Joe Manchin on a massive bill called the Inflation Reduction Act of 2022 which aims to, among other things, help fight climate change. If it passes, the act will make some noteworthy changes to the $7,500 federal EV tax credit.

The changes could help manufacturers like Tesla, Toyota and GM, who have seen their tax credits expire under the current regime. But the new rules could also hurt other manufacturers — and be a mixed bag for potential EV buyers.

How the Federal EV Tax Credit Changes for New Cars Under the Inflation Reduction Act

  • The plan removes the 200,000 vehicle limit for manufacturers. So Tesla, Toyota and GM — which have all sold more than 200K EVs and PHEVs — would not have their credits phased out as they would or have under the current system.
  • EVs would need to be built in North America to be eligible for the tax credit.
  • Individuals with an income above $150,000 or $300,000 household would not be eligible.
  • Only cars below $55,000 or trucks/SUVs/vans below $80,000 would be eligible
  • Discounts can occur at the time of sale, rather than be deducted against your tax bill the following year.

    Vehicles That Would Not Have a Federal Tax Credit Under the Inflation Reduction Act:

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    Nissan Ariya
    nissan ariya
    Nissan

    A front-wheel drive Nissan Ariya will start at $45,950, meeting the price requirement. But the Ariya is built at Nissan's Tochigi plant in Japan, which means it would not be eligible.

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    GMC Hummer EV SUT
    2022 gmc hummer ev
    GMC

    The Hummer EV SUT's cheapest EV2 version arrives in Spring 2024. But it will have a starting price of $84,650 — above the threshold for the federal tax credit.

    READ THE REVIEW

    GMC Hummer EV SUV
    the gmc hummer ev suv completes the hummer ev family and features a 1267 inch wheelbase for tight proportions and a maneuverable body, providing remarkable on  and off road capability
    GMC

    GMC's upcoming SUV version of the electric Hummer will be cheaper than the pickup, with an eventual base price of $79,995. But that would push it beyond the $80,000 limit — presuming any Hummer EV SUV buyers would be income eligible to receive it.

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    Porsche Taycan
    porsche taycan 4s light blue
    Will Sabel Courtney

    Porsche's Taycan EV is excellent. But it would lose its current $7,500 federal tax credit as it starts at $86,700 and is built in Germany.

    READ THE REVIEW

    Porsche Cayenne E-Hybrid
    porsche cayenne e hybrid plugged into wall outlet in a garage
    Porsche

    PHEV vehicles can be eligible for the full federal tax credit. But the Porsche Cayenne E-Hybrid — currently eligible for a full $7,500 credit — would not be eligible for a federal tax credit starting at $86,500.

    READ THE REVIEW

    Land Rover Range Rover PHEV
    2022 land rover range rover in california
    Will Sabel Courtney

    The 2023 Land Rover Range Rover PHEV is currently eligible for a $7,500 federal tax credit. But it would not be eligible under the current system, starting at $108,400 and being assembled in the U.K.

    READ THE REVIEW

    Subaru Solterra
    2023 subaru solterra ev on catalina island
    Tyler Duffy

    Subaru had EV tax credits to spare under the current system. But the Solterra EV, built at a Toyota facility in Japan, would not be eligible for the new federal tax credit.

    READ THE REVIEW

    Kia EV6
    kia ev6
    Will Sabel Courtney

    The Kia EV6 may be the best electric car you can buy. But it would lose its $7,500 federal tax credit because it is assembled in South Korea.

    READ THE REVIEW

    Hyundai Ioniq 5
    hyundai ioniq 5
    Hyundai

    The Hyundai Ioniq 5 swept the World Car awards. But it would lose eligibility for the $7,500 tax credit because it is assembled in South Korea.

    READ THE REVIEW

    Volvo C40 Recharge
    volvo c40 recharge parked on the side of the street next to modern looking and windowless building
    Volvo

    The C40 Recharge would qualify on price, starting at less than $80,000. But it's currently built in Volvo's factory in Ghent, Belgium.

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    The 34 Electric Cars We're Most Excited to Drive in the Future
    mercedes benz concept eqg
    Mercedes-Benz AG

    The next few years will be packed with new EVs. These are the ones that have us jazzed the most.

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