EV Tax Credit Income Limits

What income limits apply to the EV credit?

The §30D credit has modified adjusted gross income (MAGI) limits that vary by filing status: $150,000 for single filers, $225,000 for heads of household, and $300,000 for married filing jointly. If your income exceeds these limits in both the current year and the prior year, you do not qualify for the credit.

What is modified adjusted gross income (MAGI)?

MAGI starts with your adjusted gross income (AGI) from your tax return and adds back certain deductions, such as student loan interest, IRA deductions, and foreign income exclusions. For most taxpayers, MAGI is equal to or very close to AGI. You can find your AGI on line 11 of Form 1040.

The prior-year lookback rule

You can use either the current year or the prior year MAGI — whichever is lower. This means if you had a high-income year followed by a lower-income year, you may still qualify. It also means that if you expect your income to be lower this year than last year, you may want to wait to purchase until the new tax year begins.

Strategies to stay under the income limit

Contributing to a traditional IRA or 401(k) reduces your AGI and therefore your MAGI. Health Savings Account (HSA) contributions also reduce MAGI. If you are close to the income limit, timing your vehicle purchase strategically — in a lower-income year — can make the difference between qualifying and not qualifying.