Iowa EV Tax Credit

 

As more drivers make the switch to electric vehicles (EVs), the benefits are becoming increasingly clear: EVs are better for the environment, offer a virtually silent driving experience, and are cheaper to charge than traditional gas-powered vehicles.  

While some states offer additional state tax credits for purchasing an EV, Iowa is not currently one of them. However, at McGrath Chevyland, we're here to help you understand the federal tax credit available for your new EV. 

Federal Tax Credit Summary

When you buy a new, qualified plug-in electric vehicle (EV) or fuel cell electric vehicle (FCV), you may be eligible for a federal tax credit of up to $7,500 under Internal Revenue Code Section 30D. The rules for this credit have been updated by the Inflation Reduction Act of 2022 and apply to vehicles purchased from 2023 to 2032. 

Eligibility Requirements

  • The vehicle must be for your own use, not for resale.
  • It must be used primarily in the U.S.
  • Your modified adjusted gross income (AGI) must not exceed:
    • $300,000 for married couples filing jointly or a surviving spouse
    • $225,000 for heads of households
    • $150,000 for all other filers

You can use your modified AGI from the year you take delivery of the vehicle or the previous year, whichever is less. If your AGI is below the threshold in one of these years, you can claim the credit. Note that this credit is nonrefundable, meaning it can reduce your tax liability to zero but will not result in a refund if the credit exceeds the taxes you owe. 

Credit Amount

For vehicles placed in-service from January 1 to April 17, 2023: 

  • $2,500 base amount 
  • Plus $417 for a vehicle with at least 7 kilowatt hours of battery capacity 
  • Plus $417 for each additional kilowatt hour of battery capacity beyond 5 kilowatt hours 
  • Up to $7,500 total 

The minimum credit for a vehicle with the minimum 7 kilowatt hours of battery capacity is $3,751. 

For vehicles placed in-service from April 18, 2023, and after: 

  • Vehicles must meet new critical mineral and battery component requirements for a credit of up to:
       
    • $3,750 if the vehicle meets the critical minerals requirement only 
    • $3,750 if the vehicle meets the battery components requirement only 
    • $7,500 if the vehicle meets both 

Vehicles that do not meet either requirement will not be eligible for a credit. 

At McGrath Chevyland, we're committed to helping you navigate these incentives and make the most of your new electric vehicle purchase. Visit us today to learn more about how you can benefit from the federal tax credit and join the growing community of EV drivers.Â