(Credit: Emily Forlini)
If you scored a federal tax credit when buying an electric car at the dealership, congratulations! But you're not done yet.
You still need to declare that credit on your annual taxes, using the Clean Vehicle Credit Form 8936 and Schedule A of the form, H&R Block tells PCMag. However, if you received the credit but your annual income exceeds the eligibility caps, you may need to repay a portion of it.
"The taxpayer will have to repay a portion of the credit to the IRS if their modified adjusted gross income exceeds the applicable limit," H&R Block says. "Taxpayers may not know if this will occur at the time of the credit transfer."
The qualify for the $7,500 full credit or $3,750 half credit, you must have an income under $150,000 for individuals, $225,000 for head of household, and $300,000 for married or jointly filing. Here is a list of EVs eligible for the credit in 2024, with some new additions for 2025.
In 2024, the Treasury Department issued more than 250,000 tax credits for new clean vehicles, thanks in part to a policy change that allowed dealers to apply the discount at the point of purchase. No need to wait for a refund at tax time.
But car salespeople aren't tax professionals, so even if they're giving out credits like candy, it's important to know your reporting responsibilities. The dealer also has some work to do. They should be completing their own forms to report the transfer of the credit to the IRS and give you the appropriate information to report it on your return as well.
Despite the EV tax credit's popularity, President Trump said he plans to get rid of it, likely through Congress. On his first day in office, he revoked two executive orders intended to encourage EV adoption, one that tightened EPA emissions and another that disbursed funds for a nationwide charging network.
Axing the credit could slow demand and hinder US automakers' ability to scale their operations and compete abroad, particularly in China and Europe, where EVs are more popular. Many have made multi-million dollar investments in EV factories in the US, including in red states, which has led to some bipartisan pushback on Trump's EV rollback, The New York Times reports.
However, not all automakers are upset about the policy changes. Stellantis, which owns Dodge, Jeep, Ram, Chrysler, has gone through tumultuous times during the recent EV push. It hasn't found success with any of its pure EV launches, and its former CEO, Carlos Tavares, resigned in December. In a statement, Stellantis said, "President Trump’s clear focus on policies that support a robust and competitive manufacturing base in the United States is hugely positive."