Federal EV tax credit 2026 requirements

In 2026, the landscape for the Federal EV Tax Credit has shifted due to the “One, Big, Beautiful Bill” (OBBB), which modified the original Inflation Reduction Act (IRA) rules.¹

 

While the general framework of price caps and income limits remains similar to previous years, there is a major expiration date and stricter sourcing percentages you need to know for 2026.

---

1. The Critical Deadline: September 30, 2025²

Under the new legislation, the Clean Vehicle Credit (Section 30D) for new and used EVs officially ended for vehicles acquired after September 30, 2025.³

 

• If you bought your EV in 2026: You generally do not qualify for the tax credit unless you had a binding written contract and made a payment on or before September 30, 2025.⁴

   

• The “Placed in Service” Loophole: If you signed the paperwork and paid before the deadline but didn’t take delivery until early 2026, you can still claim the credit upon delivery.⁵

   

---

2. Vehicle Price Caps (MSRP Limits)

To qualify for any remaining eligibility or if credits are reinstated, the vehicle’s Manufacturer’s Suggested Retail Price (MSRP) must fall under these limits:⁶

 

• Vans, SUVs, and Pickup Trucks: Up to $80,000⁷

   

• Sedans and Other Passenger Cars: Up to $55,000⁸

   

• Used EVs: Up to $25,000 (Must be at least 2 model years old)⁹

   

---

3. Sourcing Requirements for 2026

For vehicles still eligible through the “binding contract” transition, the requirements for battery parts and minerals have become much stricter in 2026:

Requirement	2025 Threshold	2026 Threshold
Critical Minerals (Extracted/Processed in US or FTA partners)	60%	70%
Battery Components (Manufactured/Assembled in North America)	60%	70%

• Foreign Entity of Concern (FEOC) Rule: As of 2026, any vehicle containing any critical minerals extracted, processed, or recycled by a “Foreign Entity of Concern” (such as China or Russia) is strictly disqualified from the credit.¹⁰

   

---

4. Buyer Income Limits (MAGI)

Your Modified Adjusted Gross Income (MAGI) must be below these thresholds to claim the credit (based on the year of delivery or the prior year):¹¹

 

Filing Status	New EV Limit	Used EV Limit
Married Filing Jointly	$300,000	$150,000
Head of Household	$225,000	$112,500
Single / All Others	$150,000	$75,000

---

5. New Benefit: 2026 Car Loan Interest Deduction¹²

While the $7,500 tax credit has largely expired for new purchases in 2026, the OBBB introduced a new incentive:

• What it is: A deduction for interest paid on loans used to purchase new “Made-in-America” vehicles.¹³

   

• Limit: Up to $10,000 per year in interest can be deducted.¹⁴

   

• Requirement: The vehicle must have undergone final assembly in the United States.¹⁵

   

Note: The Alternative Fuel Vehicle Refueling Property Credit (for home chargers) is still active through June 30, 2026, offering 30% back on installation costs (up to $1,000).¹⁶

 

Would you like me to check if a specific 2026 model was assembled in the U.S. to see if it qualifies for the new loan interest deduction?