2021 Toyota Camry Hybrid Tax Credit Eligibility

The 2021 Toyota Camry Hybrid is not eligible for any federal tax credits.
Written by Amber Reed
Reviewed by Kaitlin May
background
As a traditional hybrid electric (HEV), the 2021 Toyota Camry Hybrid is not eligible for any federal tax credits. 
In 2010, the federal government began incentivizing consumers to choose hybrid and electric vehicles. Initially, the offer was anywhere between $2,500 and $7,500 in tax credits with the purchase of a qualifying vehicle. The regulations and requirements have shifted as the years have gone by, most recently with the passage of the Inflation Reduction Act of August 2022. 
This Act made a lot of vehicles ineligible for a federal tax credit, and the Toyota Camry Hybrid was one of them. So if you can’t get a tax credit when you purchase a 2021 Toyota Camry Hybrid, is it still a worthy option? What other choices are out there—and just what exactly do all these latest regulations say, anyway? Read on for everything you need to know! 

Is the 2021 Toyota Camry Hybrid still eligible for federal tax credit?

No, the 2021 Toyota Camry Hybrid is not eligible for any federal tax credits. 
There are a lot of stipulations in the new federal tax credit laws, and several of them exclude the 2021 Toyota Camry Hybrid. First and foremost, the tax credit is only available to all-electric vehicles (EVs) and plug-in hybrid electric vehicles (PHEVs). As a traditional hybrid vehicle (HEV), the 2021 Toyota Camry Hybrid doesn’t cut it. 
This can be a little confusing, as the terms “hybrid” and “electric vehicle” get used in a lot of different ways, and it can be difficult to determine just what type of vehicle is being referred to. But for the current federal tax credit, a vehicle needs to be either fully electric or a plug-in hybrid
This doesn’t just take the Camry out of the running—a lot of other HEVs from major manufacturers don’t qualify as well. The
Honda Accord Hybrid
and the
Ford Fusion Hybrid
are also excluded, as are other Toyota HEVs like the
Prius
and the
RAV4
Hybrid.  
But even if the 2021 Camry was a PHEV, it still wouldn’t be eligible due to some other newly introduced requirements about the manufacture of EV and PHEV batteries. Let’s break down the specifics.
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What you should know about the new federal EV tax credit requirements

The new federal requirements changed quite a few things, like removing the 200,000 vehicle-per-maker cap. This makes automakers like
Tesla
eligible again—at least when it comes to that particular parameter. However, some new eligibility parameters were introduced as well, and they exclude a lot of vehicles from getting the credit. Here’s the upshot!
For starters, there are new income requirements. If you’re a single person, you have to make $150,000 or less a year to qualify. Couples who file jointly must have an annual income of $300,000 or less to get the tax credit. 
The price of the vehicle is also a factor. To be eligible, a sedan must be priced under $55,000. Trucks, SUVs, and vans must be less than $80,000. A used EV or PHEV needs to be less than $25,000 no matter what it is—and a used vehicle is only eligible for the credit once in its life. So if you buy a used PHEV from a dealership and the previous owner already claimed the tax credit, you’re out of luck. 
Last but certainly not least, there are some onerous requirements around the construction of batteries in EVs and PHEVs. To be eligible, the battery of the vehicle must have a certain percentage of its materials sourced from either North America or a free-trade partner in the US. But that’s not all—the batteries also have to have North America as their final assembly location. 
How many vehicles currently meet these requirements? Unfortunately, none. But automakers are scrambling to get there while making some bold claims—so stay tuned. Some sources have reported that the battery-related requirements don’t appear to be enforced, but no one seems to know for sure. 

Other electric vehicle incentives

If all these rules have made you despair, worry not! Depending on where you live, there might be EV and PHEV incentives that are available at the state and even city levels. Many states have programs that offer rebates when you purchase a qualifying vehicle or install a home charging station. 
Some states are more generous than others, though.
California
, Colorado, and Oregon all offer a wide variety of rebates and incentives, while states like
Alabama
and Arkansas are less giving. Make sure you do some research into what’s available in your area—you might be pleasantly surprised! 

Is a 2021 Toyota Camry Hybrid still worth buying? 

Even though you won’t be getting a tax credit, is a 2021 Toyota Camry Hybrid still a good car to purchase? Yes!
Federal tax credit or not, the 2021 Toyota Camry Hybrid is a solid option if you’re in the market for a used hybrid sedan. Car and Driver gave the 2021 Camry an 8.5/10, and US News awarded it an 8.7/10. Edmunds rates the 2021 Camry Hybrid a respectable 7.9/10, and the experts at Kelley Blue Book gave it a glowing 4.6/5. 
What do they like? For starters, the fuel economy sets it apart. With an EPA estimated 51/53/52 mpg in city/highway/combined mileage, this is a vehicle that delivers real savings at the gas pump. The interior is comfortable and roomy, and the features are desirable. It also has a wealth of standard safety features and is backed by Toyota’s
fierce reputation for quality and reliability
When new, a 2021 Toyota Camry Hybrid started between $27,000 and $33,000. Today, used ones seem to be priced in roughly the same range, with a few certified pre-owned ones priced near $37,000! What does this tell us? These vehicles are holding their value exceptionally well, which is a strong indicator of their value. 
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What to consider instead of a 2021 Toyota Camry Hybrid

We know the 2021 Camry Hybrid is a worthy option, but what if you want to look elsewhere? Just about every automaker has hybrid offerings of some sort, but what are the best alternatives to the 2021 Toyota Camry Hybrid? 
The particulars as to which vehicles may or may not
qualify for a federal tax credit
are irritatingly murky, to say the least. If you want a used hybrid, chances are that someone else has already claimed the tax credit. With this in mind, here are a few suggestions for those in the market for a used hybrid or EV.

Sensible sedan #1: 2021 Hyundai Sonata Hybrid

Used price range: $30,000 to $35,000
The 2021
Hyundai Sonata Hybrid
boasts an equally impressive fuel economy rating of 50/54/52 mpg in city/highway/combined driving. Like the Camry, the Sonata provides a roomy and comfortable interior with attractive styling—and a trunk that provides one more square foot of space than the Camry. Rated an 8.1/10 by Edmunds and an 8.5/10 by Car and Driver, this stylish sedan is also backed by Hyundai’s impressive manufacturer’s warranty. 

Sensible sedan #2: 2021 Honda Accord Hybrid

Used price range: $30,000 to $40,000
The Honda Accord Hybrid is one of the Camry’s biggest competitors, and it’s a tough one to beat. It got a perfect 10/10 from Car and Driver and a solid but less-than-perfect 8.1/10 from Edmunds. Fuel economy is slightly less than the Camry at 48/47/48 mpg, but those numbers are still nothing to be ashamed of. The Accord Hybrid offers a solid combination of pep, practicality, style, and value—and savings at the gas tank to boot!

All-electric option—and maybe a tax credit: 2021 Volkswagen ID.4 

Starting price: $41,245
Maximum range: 260 miles
If you feel like you’re ready to leap into an all-electric vehicle, you might want to consider the 2021
Volkswagen ID.4
. This one might also be eligible for the used EV credit, provided that the previous owner didn’t already claim it, and that the feds are looking the other way on the whole battery-source thing. The 2021 ID.4 got an 8/10 from Car and Driver and a 7.9/10 from Edmunds, which are respectable ratings. It’s more of a small crossover than a sedan, but we’re not quibbling. 
The ID.4 comes nicely equipped with a generous supply of safety and tech features, and the cabin is roomy and offers plenty of storage. With an EPA estimated range of 260 miles on a full charge, this choice means that you can skip the gas station altogether.
MORE: How to choose an eco-friendly car
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