Which Vehicles Qualify for U.S. Alternative-Fuel Tax Credits

In the United States, federal “alternative-fuel” vehicle tax credits primarily apply to electric vehicles: new battery electric vehicles (BEVs), plug‑in hybrids (PHEVs), and hydrogen fuel‑cell electric vehicles (FCEVs). Certain used EVs also qualify, and businesses can claim credits for commercial clean vehicles, including medium- and heavy‑duty electric trucks and buses. Conventional hybrids, flex-fuel (E85), propane (LPG), compressed natural gas (CNG) vehicles, and diesel/gas models do not currently qualify for federal vehicle purchase credits.

What “alternative-fuel” means for federal vehicle credits today

Despite the broad phrase, current federal vehicle purchase incentives focus on “clean vehicles” that are powered by electricity (from a rechargeable battery) or by hydrogen via a fuel cell. Other alternative fuels may receive separate production or fuel excise incentives, but not vehicle purchase credits.

For individuals: New Clean Vehicle Credit (Internal Revenue Code §30D)

The New Clean Vehicle Credit covers new BEVs, PHEVs, and FCEVs purchased for personal use and placed in service in the U.S. Eligibility depends on income, vehicle price caps, assembly and sourcing rules, and dealer reporting. The maximum credit is up to $7,500, subject to strict criteria that changed under the Inflation Reduction Act and subsequent IRS/Treasury guidance.

The following list outlines the core eligibility requirements for a new clean vehicle to qualify under §30D.

• Vehicle types: BEVs and PHEVs with at least a 7 kWh battery and the ability to charge from an external source; FCEVs also qualify.
• Income limits: Modified adjusted gross income (MAGI) must not exceed $300,000 (married filing jointly), $225,000 (head of household), or $150,000 (single).
• Price caps (MSRP at time of sale): $80,000 for SUVs, vans, and pickups; $55,000 for other cars. Classification follows EPA/IRS rules for the specific trim.
• Final assembly: Most plug‑in vehicles must undergo final assembly in North America. Fuel‑cell vehicles are eligible without the North America final-assembly requirement.
• Battery sourcing rules (BEVs/PHEVs only): Up to $7,500 comprised of two $3,750 components tied to U.S./FTA‑country critical minerals and North American battery components. Foreign Entity of Concern (FEOC) restrictions disqualify vehicles with proscribed content (battery components barred starting 2024; critical minerals barred starting 2025).
• Seller reporting and point‑of‑sale transfer: From Jan. 1, 2024, dealers must submit a time‑of‑sale report to the IRS; buyers may transfer the credit to the dealer to reduce the purchase price immediately.
• Use and timing: Vehicle must be new (first owner), used primarily in the U.S., and placed in service in the tax year claimed.

If any one of these criteria is not met—for example, income above the cap, MSRP above the cap, ineligible battery content, or missing dealer reporting—the vehicle will not qualify for the credit.

Which vehicle types qualify under §30D

Federal law is technology‑neutral among qualifying electric powertrains so long as other criteria are met. The next list clarifies which propulsion types are in scope.

• Battery Electric Vehicles (BEVs): Fully electric, no combustion engine; subject to final assembly and battery sourcing rules.
• Plug‑in Hybrid Electric Vehicles (PHEVs): Must have a minimum 7 kWh battery and charge from an external source; subject to final assembly and battery sourcing rules.
• Fuel‑Cell Electric Vehicles (FCEVs): Powered by hydrogen fuel cells; eligible for up to $7,500 without battery sourcing requirements and generally without North American final-assembly requirements.

Conventional hybrids that cannot be plugged in, as well as vehicles powered by gasoline, diesel, CNG, or propane, are not eligible for §30D.

How much is the new-vehicle credit and how to claim it

The credit is up to $7,500: $3,750 tied to critical mineral sourcing and $3,750 tied to battery component sourcing (for BEVs/PHEVs). Consumers can elect to transfer the credit to a participating dealer at the point of sale to lower the upfront cost. You must receive a seller’s time‑of‑sale report and keep it with your tax records. If you do not transfer the credit, you claim it on your tax return for the year the vehicle is placed in service. The credit is nonrefundable and cannot be carried forward.

For individuals: Previously Owned Clean Vehicle Credit (IRC §25E)

Used EV buyers may qualify for a credit worth up to $4,000 (or 30% of the sale price, whichever is less) on eligible used BEVs, PHEVs, and FCEVs. This credit has different income and price limits and fewer vehicle sourcing constraints than §30D.

Below are the key requirements for the used clean vehicle credit.

• Vehicle eligibility: Must be at least two model years old at time of sale; must be a qualifying BEV, PHEV (7 kWh+), or FCEV; not previously claimed as a used clean vehicle under §25E.
• Sale requirements: Purchase price must be $25,000 or less; vehicle must be bought from a licensed dealer; not from a related party.
• Buyer limits: MAGI must not exceed $150,000 (married filing jointly), $112,500 (head of household), or $75,000 (single); buyer cannot be claimed as a dependent; cannot have claimed a used clean vehicle credit in the prior three years.
• Documentation and reporting: Dealer must submit the time‑of‑sale report; buyers may transfer the credit at point of sale starting in 2024.

Unlike §30D, there are no MSRP caps by body type and no battery sourcing or final‑assembly constraints for used vehicles, making many pre‑owned EVs and FCEVs eligible if the price and income rules are met.

For businesses and nonprofits: Commercial Clean Vehicle Credit (IRC §45W)

Businesses and tax‑exempt organizations can claim a credit for qualifying new commercial clean vehicles, from light‑duty fleet cars to medium‑ and heavy‑duty electric trucks and buses. This credit targets fleet electrification and generally has broader vehicle eligibility than the consumer credits.

The following list summarizes §45W qualifications and amounts.

• Eligible powertrains: Battery‑electric or fuel‑cell electric vehicles. Minimum battery capacity: 7 kWh for vehicles under 14,000 lbs GVWR; 15 kWh for 14,000 lbs and above.
• Credit amount: The lesser of (a) 30% of the vehicle’s cost (15% if it has an internal combustion engine, e.g., certain plug‑in hybrids) or (b) the incremental cost versus a comparable gas/diesel vehicle, capped at $7,500 for vehicles under 14,000 lbs and $40,000 for 14,000 lbs or more.
• Key advantages: No income or MSRP caps; no North American final‑assembly or battery sourcing requirements; available to tax‑exempt entities (via elective payment/direct pay).
• Use requirements: Vehicle must be for business or tax‑exempt use, not for resale, and primarily used in the U.S. Placed‑in‑service date drives the tax year of the credit.

Leased consumer vehicles often qualify under §45W at the lessor level; many leasing companies pass some or all of the credit through as reduced lease payments, though this pass‑through is contractual, not guaranteed.

Important 2024–2025 changes affecting eligibility

Rules tightened in 2024 and tighten again in 2025, especially for battery sourcing. These changes influence which specific trims qualify in any given model year.

Here are the developments most likely to affect vehicle eligibility now.

• Foreign Entity of Concern (FEOC) restrictions: From 2024, batteries with FEOC components disqualify BEVs/PHEVs under §30D; starting 2025, FEOC critical minerals will also disqualify. Expect the eligible model list to shift.
• Point‑of‑sale credit transfer: Since Jan. 1, 2024, buyers can transfer §30D and §25E credits to dealers to lower upfront costs if the dealer is enrolled in IRS Energy Credits Online and files the time‑of‑sale report.
• Battery thresholds: The 7 kWh minimum battery capacity continues to apply to light‑duty plug‑ins across credits; medium/heavy‑duty require 15 kWh under §45W.
• Model eligibility is dynamic: Manufacturers frequently update battery sourcing and assembly. A trim eligible last quarter may not be eligible this quarter—and vice versa.

Because of these shifts, always verify a specific VIN and trim against official IRS resources at the time of purchase or lease.

What does not qualify under current federal vehicle credits

It’s easy to assume any“alternative-fuel” model gets a credit, but several categories do not qualify for a federal vehicle purchase credit today.

• Conventional (non‑plug‑in) hybrids, mild hybrids, and 48‑volt systems.
• Flex‑fuel (E85), CNG, propane (LPG), and diesel/gas vehicles.
• Motorcycles, low‑speed neighborhood electric vehicles, off‑road equipment, and most two‑/three‑wheelers.
• Aftermarket conversions that do not meet federal certification for the relevant credit.

While some of these fuels may benefit from separate producer or excise tax incentives, they do not translate into federal purchase credits for consumers under today’s law.

How to check if a specific vehicle qualifies

Eligibility is model‑, trim‑, and sometimes VIN‑specific. Follow these steps to confirm before you buy or lease.

The next list provides a practical verification checklist for buyers and fleets.

• Use the IRS’s official lists: Review the “Credit for New Clean Vehicles” and “Previously Owned Clean Vehicles” pages for eligible manufacturers and models, including current sourcing status.
• Verify VIN and assembly: Check the NHTSA VIN decoder and manufacturer certifications for final assembly location (for §30D plug‑ins) and battery origin details.
• Confirm classification and MSRP cap: Ensure the exact trim’s EPA body type (car vs. SUV/van/pickup) and MSRP meet §30D caps; trims can differ.
• Ensure dealer compliance: Ask the dealer to submit the time‑of‑sale report and provide you with the confirmation. If transferring the credit, verify it on the buyer’s order.
• For used EVs: Confirm the model year is at least two years older, the sale price is ≤ $25,000, the vehicle hasn’t already been claimed under §25E, and the sale is from a licensed dealer.
• For fleets (§45W): Document battery capacity, GVWR, incremental cost (if applicable), business use, and placed‑in‑service date; coordinate with your tax advisor on elective payment if tax‑exempt.

If the vehicle or paperwork fails any step, the IRS can deny the credit. Keep all records with your tax documentation.

Where to find authoritative, current information

Because eligibility can change quickly, rely on official sources when making a purchase decision.

Consult the following resources before you commit.

• IRS: “Credits for New Clean Vehicles Purchased in 2023 or After,” “Used Clean Vehicle Credit,” and “Commercial Clean Vehicle Credit” guidance and eligibility lists.
• U.S. Department of Energy (DOE) and EPA resources on vehicle classifications and VIN lookups.
• Manufacturer eligibility attestations and dealer time‑of‑sale documentation.
• State energy offices and utility programs for stackable incentives that can further reduce costs.

These sites are updated as manufacturers change sourcing or as Treasury/IRS issues new guidance, making them the most reliable checkpoints.

Bottom line

Under current U.S. federal rules, the vehicles that qualify for “alternative fuel” purchase tax credits are almost exclusively electric: new BEVs, PHEVs, and FCEVs meeting income, price, assembly, and (for plug‑ins) battery‑sourcing rules; used EVs and FCEVs priced at $25,000 or less; and a wide range of commercial battery‑electric and fuel‑cell vehicles for businesses and nonprofits. Conventional hybrids and vehicles fueled by CNG, LPG, or E85 do not qualify for a federal purchase credit, though they may benefit from other, separate programs. Always verify eligibility for the exact trim and VIN at the time of purchase.

Summary

Qualifying vehicles for federal alternative-fuel tax credits include: (1) new BEVs, PHEVs, and FCEVs under §30D that meet income, MSRP, assembly, and sourcing rules; (2) used qualifying EVs/FCEVs under §25E priced at $25,000 or less with buyer income limits; and (3) commercial battery‑electric and fuel‑cell vehicles under §45W with generous caps and no sourcing or MSRP limits. Eligibility is dynamic—check IRS lists, verify VIN and dealer reporting, and keep documentation to secure the credit.

Who qualifies for the alternative fuel vehicle refueling property credit?

If you install property to store or dispense clean-burning fuel or recharge electric vehicles in your home or business, you may be eligible for the Alternative Fuel Vehicle Refueling Property Tax Credit. The property must be installed in a qualifying location.

Which EVs qualify for the $7500 tax credit?

Which EVs and PHEVs Are Eligible for a Federal Tax Credit?

Model Year/Vehicle	Credit Available	Retail Price Cap
2023-25 Ford F-150 Lightning EV	$7,500	$80,000
2026 Genesis Electrified GV70 EV	$7,500	$80,000
2026 GMC Sierra EV	$7,500	$80,000
2024-26 Honda Prologue EV	$7,500	$80,000

How to check if a vehicle qualifies for tax credit?

Visit the FuelEconomy.gov Tax Center to determine whether a vehicle qualifies for a tax credit, navigate eligibility requirements, and read frequently asked questions. You can also use the tax credit calculator to determine how much you can claim on a used vehicle.

What is an alternative fuel vehicle AFV?

The term typically refers to internal combustion engine vehicles or fuel cell vehicles that utilize synthetic renewable fuels such as biofuels (ethanol fuel, biodiesel and biogasoline), hydrogen fuel or so-called “Electrofuel”.