If you’ve been thinking about buying an electric vehicle in 2025 and hoping to score that sweet $7,500 federal tax credit, here’s the truth: it’s not as simple as it used to be.
In fact, thanks to new sourcing rules, revised IRS guidance, and the fine print inside the Inflation Reduction Act, most EVs that used to qualify no longer do. Automakers are scrambling, buyers are confused, and many popular electric models are now stuck on the outside looking in.
So who still qualifies? How does the credit work in 2025? And what should you know before signing a deal?
Let’s break it all down—plain and simple.
What Changed in 2025?
In short: the federal government tightened the rules again.
When the Inflation Reduction Act passed in 2022, it overhauled the EV tax credit system to prioritize U.S.-based manufacturing and sourcing. Then in early 2024, the IRS enforced stricter rules around battery components and critical minerals.
Now, in 2025, here’s what buyers are dealing with:
- To qualify for the full $7,500 credit:
- The EV must be assembled in North America
- 50%+ of battery components must come from the U.S. or a trade partner
- 40%+ of critical minerals must be sourced domestically or from trade-friendly nations (like Canada, Chile, Australia)
If the battery fails to meet one of those two thresholds, you only get $3,750. If it fails both, you get nothing—even if the car is electric.
And there’s more: income caps and price limits.
- Income limits:
- $150,000 for individuals
- $225,000 for heads of household
- $300,000 for joint filers
- MSRP limits:
- $55,000 for cars
- $80,000 for SUVs, trucks, vans
EVs That Still Qualify for the Full $7,500 Credit in 2025
Here’s a snapshot of electric vehicles that currently qualify (as of April 2025) for the full tax credit, based on U.S. government records and automaker confirmations.
- Tesla Model Y (AWD Long Range)
- Chevrolet Equinox EV (coming mid-2025)
- Chevrolet Blazer EV
- Ford F-150 Lightning (some trims)
- Ford Escape Plug-In Hybrid
- Chrysler Pacifica Plug-In Hybrid
- Cadillac Lyriq
- Rivian R1T and R1S (depending on configuration)
- Tesla Model 3 RWD (partial, more below)
These models meet both sourcing requirements and assembly location requirements, making them eligible for the full federal credit if you meet the income and price rules.
EVs That Only Qualify for $3,750
Some vehicles meet only one sourcing threshold (either battery or minerals), so they only qualify for a half credit—$3,750.
- Tesla Model 3 Rear-Wheel Drive
- Ford Mustang Mach-E (certain trims)
- Jeep Grand Cherokee 4xe
- Jeep Wrangler 4xe
This group is shrinking fast. Automakers are working to requalify, but supply chain complexity makes it difficult.
Popular EVs That No Longer Qualify (As of Spring 2025)
This is where the real frustration begins. Many well-known, widely driven EVs no longer qualify at all—even though they’re built in North America or were previously eligible.
- Hyundai Ioniq 5 and Ioniq 6
- Kia EV6 and Niro EV
- Nissan Ariya
- Volkswagen ID.4 (some trims)
- BMW i4 and iX
- Lucid Air
- Polestar 2
- Toyota bZ4X
- Subaru Solterra
Why? Most of these vehicles don’t meet the new battery sourcing rules, and several are built overseas. It doesn’t matter if the car is electric. No tax credit.
What About Used EVs?
Good news here: used EVs can still qualify for a tax credit of up to $4,000—as long as:
- The car is at least two years old
- Purchased from a licensed dealer (not private party)
- Sales price is under $25,000
- Buyer’s income is under $75,000 (individual) or $150,000 (joint)
This applies to any used EV or plug-in hybrid that meets those standards, even if it never qualified for the original $7,500 credit when new.
Do Lease Deals Still Qualify?
Yes—and this is the biggest loophole still open in 2025.
Under current law, leased EVs still qualify for the full $7,500 credit—no matter where they’re made or what minerals they use. That’s because leased vehicles count as commercial sales under IRS rules, and commercial vehicles are exempt from the strict sourcing requirements.
So if you’re looking at a Hyundai Ioniq 5, Kia EV6, or BMW i4—leasing might be your best shot at capturing the benefit.
How to Claim the Credit (And Actually Get It)
In 2025, the credit no longer comes as a refund on your taxes the next year—it’s now available at the point of sale, as long as the dealer is enrolled in the IRS program.
That means you can:
- Use the credit to reduce the price of the car right away
- Avoid waiting a year to claim it
- Transfer the credit directly to the dealer
Make sure your dealership is participating (many are), and ask them to run the VIN through the IRS portal to confirm eligibility.
FAQ
Do all electric cars qualify for the $7,500 tax credit in 2025?
No. Most no longer do. To qualify for the full credit, the vehicle must be built in North America and meet strict battery sourcing rules.
Is there still a tax credit for hybrids?
Only plug-in hybrids qualify—and only if they meet the same sourcing and assembly rules. Regular hybrids (like the Prius) do not qualify.
Can I lease an EV and still get the tax credit?
Yes. Leasing an EV bypasses the strict sourcing rules, and the dealer can apply the credit as a discount.
Is there an income limit for the credit?
Yes. For new EVs, individual buyers must make less than $150,000 (or $300,000 for joint filers). Used EV buyers must earn under $75,000 ($150,000 joint).
Is the credit still available as a refund later?
No. In 2025, the credit is processed at the point of sale—you don’t have to wait until tax season.
Final Word
The EV tax credit was once a simple incentive. Now? It’s a game of manufacturing origins, minerals, sourcing partners, income limits, and battery composition.
Still, if you know the rules—and you pick the right vehicle—you can still come away with serious savings. Whether that’s a U.S.-built RAV4 Prime, a Tesla Model Y, or a leased Hyundai Ioniq 5, the key is timing and research.
We’ll keep tracking every update and every model that drops off—or comes back on—the list.
Stick with BidForAutos.com for real answers, real lists, and the EV buying guidance no one else is giving you straight.
