Inflation Reduction Act: Vehicles

Green Your Commute and Accelerate the Clean Energy Transition

The Inflation Reduction Act (IRA) tax credits lower the cost of purchasing a new or used electric vehicle (EV) – both battery-electric and plug-in hybrid models – including cars, pick-up trucks, SUVs, and vans.

Increasing EV ownership is critical to reducing greenhouse gas emissions and meeting New York’s climate goals. For drivers and fleet managers, EVs also bring reduced maintenance and operation costs compared to gas-powered vehicles, saving money and hassle for drivers and commercial fleets. The convenience of home and onsite charging, plus New York’s rapidly growing charging infrastructure, make EVs a solution for daily commutes and longer trips.

How Much Could You Save on an Electric Vehicle?

Combined, the IRA tax credit and New York’s Drive Clean Rebate can save New York residents up to $9,500 on a selection of new EV models.

Personal Vehicles

*For EVs placed in service January 1 to April 17, 2023, the tax credit is calculated from a base amount of $2,500, plus $417 for a vehicle with at least 7 kilowatt hours of battery capacity and an additional $417 for each kilowatt hour of battery capacity beyond 5 kilowatt hours. For example, an EV with 7 kilowatt hours of battery capacity would receive a credit of $3,751 ($2,500 + 3 times $417).
**Property must be in an eligible low-income or non-urban census tract .

Eligible Technology	Federal IRA Tax Credit 2023-2032	New York State Incentives and Tax Credits
New Electric Vehicle	Up to $7,500 for eligible buyers of qualified clean vehicles*	Up to $2,000 rebate for purchased or leased eligible vehicle
Used Electric Vehicle	30% of the sale price up to $4,000 for eligible buyers of qualified, previously owned clean vehicles
Home Electric Vehicle Charger	30% of cost, up to $1,000**

Commercial Vehicles

*IRA tax credits may not exceed $7,500 for vehicles under 14,000 lbs. and $40,000 for vehicles above 14,000 lbs.
**Property must be in an eligible low-income or non-urban census tract .

Eligible Technology	Federal IRA Tax Credit 2023-2032	New York State Incentives and Tax Credits
Plug-in Hybrid Electric Vehicles	Up to 15% of cost for qualified clean vehicles*	Up to $2,000 rebate for purchased or leased eligible vehicle
Battery-Electric or Fuel Cell Electric Vehicles	Up to 30% of cost for qualified clean vehicles*	Up to $2,000 rebate for purchased or leased eligible vehicle
Vehicle Charging or Fueling Station	Up to 30% of cost (6% base rate with an additional 24% for meeting labor standards), up to $100,000**	Up to $2,000 rebate per charging port at workplaces or multi-unit dwellings. $500 additional incentive per port if located in Disadvantaged Community.

How Does the IRA Tax Credit Work?

There are two options for applying the IRA tax credit to reduce the cost of an eligible EV purchase. As of January 1, 2024, the IRS allows buyers to transfer the IRA tax credit to a car dealership to reduce the upfront purchase price of a new or used EV. Alternatively, buyers can claim the tax credit later when filing their tax returns.

Dealership must register their business as a vehicle seller or dealer on IRS Energy Credits Online to allow buyers to transfer the tax credit for a point-of-sale discount. Once registered, a dealership submits the required documentation to the IRS through the online portal to complete the tax credit transfer. Buyers receive a copy of the seller report submitted to IRS Energy Credits Online.

For eligible EVs purchased in 2023, the IRA tax credit is claimed when filing tax returns in 2024.

Which Electric Vehicles Are Eligible for IRA Tax Credits?

Whether an EV qualifies depends on several factors, including the manufacturer, vehicle design, price, where it’s assembled, where battery components are sourced, and more.

Which Electric Vehicles Qualify for IRA Tax Credits and NYS Rebates?

New York residents may be eligible to combine IRA tax credits with the Drive Clean Rebate when they purchase certain new EV models. The table below lists EV models that qualify for both the IRA tax credit and Drive Clean Rebate.

Some manufacturers have yet to submit information on eligible EV models that meet the IRA requirements. This list will continue to be updated as eligible EVs are added.

New York drivers can also browse the full list of Drive Clean Rebate eligible models and IRA eligible models to get a comprehensive view of their options for EV savings.

How to Claim IRA Tax Credits and Save

The IRA makes it easier for many New York drivers and businesses to purchase clean vehicle technologies, including battery-electric, plug-in hybrid, and fuel cell electric vehicles.

Buyers that execute a clean vehicle credit transfer  must complete a transfer election and work with their car dealership to submit information and attestations for a time of sale report. If transferring the credit, buyers will need the time of sale report to complete and submit Form 8936 when filing their annual tax return.

Here’s how to claim tax credits if you’re purchasing a new, used, or commercial EV:

• New Personal Electric Vehicle: Complete Form 8936, Qualified Plug-in Electric Drive Motor Vehicle Credit (Including Qualified Two-Wheeled Plug-in Electric Vehicles and New Clean Vehicles), and file it with your tax return for the year you took possession of the vehicle to claim the new clean vehicle credit.
• Used Personal Electric Vehicle: Complete Form 8936, Qualified Plug-in Electric Drive Motor Vehicle Credit (Including Qualified Two-Wheeled Plug-in Electric Vehicles and New Clean Vehicles), and file it with your tax return for the year you took possession of the vehicle to claim the used clean vehicle credit.
• Commercial Electric Vehicle: The IRS is still finalizing the form needed to claim the credit. Check the IRS Commercial Clean Vehicle Credit page for updates. Note that businesses will need to provide the vehicle’s VIN along with the amount of the credit.