Ford Mustang Mach-E Tax Credit Eligibility

The Ford Mustang Mach-E electric vehicle is eligible for a $3,750 partial tax credit as of April 18, 2023.
Written by Sarah Gray
Edited by Pat Roache
Qualifying buyers of a 2022 or 2023
Ford Mustang Mach-E
put into service on or after April 18, 2023, are eligible for a partial tax credit of $3,750.
  • The Ford Mustang Mach-E qualifies for half of the available federal tax credits because 50% of its battery components are produced or assembled in North America.
  • With fantastic expert reviews and acceleration to rival Tesla, the 2023 Mustang Mach-E is a fantastic electric SUV purchase regardless of federal tax credit.
  • The 2023 Volkswagen ID.4 and Chevrolet Bolt EUV are affordable alternatives to the Mach-E and qualify for the full $7,500 tax credit as of April 18, 2023.

The Ford Mustang Mach-E is eligible for a $3,750 federal tax credit

Despite strict new requirements from the Inflation Reduction Act of 2022, the Ford Mustang Mach-E is once again eligible for a
federal EV tax credit
as of April 18, 2023.
Partial $3,750 tax credit eligibility: Under recent updates from the Department of Treasury, buyers of a 2023 Mustang Mach-E are eligible for $3,750 in federal clean vehicle tax incentives if their new EV is put into service on or after April 18, 2023. Here’s why:
  • The Inflation Reduction act removed the 200,000-vehicle sales cap restriction for automakers as of January 1, 2023, which Ford had been quickly approaching.
  • The 2023 Mustang Mach-E MSRP starts below the $80,000 price cap for new SUVs. (Higher
    trim levels with additional package upgrades
    may not qualify.)
  • Fifty percent of the Mustang Mach-E’s battery components are produced or assembled in North America, qualifying it for the first half of $7,500 federal tax credits available.
Why not a full tax credit? The new regulations from the U.S. Treasury Department split the $7,500 federal tax credit in half based on two battery construction requirements. The Mustang Mach-E’s battery meets the first requirement, but at least 40% of its critical minerals would need to be extracted in the U.S. or a fair-trade agreement to qualify for the remaining $3,750.
Other Ford vehicles with EV tax credits: While the Mach-E and the Ford E-Transit van have both had their EV tax credits halved, the Ford F-150 Lightning is still eligible for the full $7,500 federal tax credit—for now. 

Other EV tax incentives for the Mustang Mach-E

Many states offer tax credits and local rebates for electric and plug-in hybrid vehicles in addition to the available $3,750 in federal tax credits for the Mustang Mach-E. 
What to do: Check with your state DMV agencies and local electric companies for qualifying EV incentives.

The Ford Mustang Mach-E is worth buying with a federal tax credit

The 2023 Ford Mustang Mach-E starts at $44,795 MSRP for the
Mach-E Select
trim, or $41,045 after the partial federal tax credit. Consider the MSRPs of the Mach-E’s other trims before and after the tax credit below:
Ford Mustang Mach-E trim
Starting MSRP
Price with tax credit
2023 Mach-E Select
$45,995
$42,245
$50,995
$47,245
2023 Mach-E California Route 1
$57,995
$54,245
$63,995
$60,245
2023 Mach-E GT Performance
$68,995
$65,245
Regardless of the tax credit, the Mustang Mach-E is a solid option in the EV crossover segment with the following praise from its accolades:
  • Car and Driver: 9/10 overall rating with third-place ranking among EV crossovers
  • Edmunds: “Great” rating of 8.2/10 overall with second-place ranking among all-wheel drive electric SUVs
The Mach E’s powertrain is available with a standard-range 70-kWh or an extended-range 91-kWh battery pack combined with dual motors for the following specs across trims:
  • Horsepower: 266 to 480 hp
  • Torque: 317 to 634 lb-ft
  • Drivetrain: Standard all-wheel drive
Tesla-rivaling acceleration: The Mach-E GT Performance launches from 0 to 60 mph in just 3.7-seconds. Add bold styling and an EPA rating of up to 300 miles of range on a single charge, and you can see why the Mach E beatout Tesla for Car and Driver’s inaugural
EV of the Year
award in 2021. 

Electric cars to buy instead of a Ford Mustang Mach-E

With new manufacturing requirements that went into effect on January 1, 2023, the Mustang Mach-E’s most popular EV SUV competitors—the Hyundai Ioniq 5 and Kia EV6—are no longer eligible for federal tax credits. However, many of the vehicles in the EV segment
still qualify for the EV or PHEV tax credit
under the developing regulations from the Department of Treasury.  
Let’s take a look at some of the Ford Mustang Mach-E’s more affordable competitors.

If you want the full EV tax credit: 2023 Volkswagen ID.4

Starting price: $38,995
Possible tax credit: $7,500
Maximum range: 275 miles
The 2023
Volkswagen ID.4
is the closest-ranking electric SUV that still qualifies for a federal tax credit. Better yet—it qualifies for the full federal tax credit (as opposed to the Mach-E’s partial credit).
The entry-level ID.4 Standard model beats the Mach-E Select by $10,750 after applying federal tax credits, but it’s specs are less impressive:
  • Standard rear-wheel drive
  • Maximum 145 horsepower and 203 lb-ft of torque
  • 208-mile driving range
Consider the upgrades: The ID.4’s higher trim levels range from $43,995 to $51,695 before tax credit with AWD costing an additional $3,800 for the following specs:
  • Maximum 295 horsepower and 3339 lb-ft of torque
  • 5.4-second zero-to-60 acceleration time.
The bottom line: Thanks to a full $7,500 eligible tax credit, the Volkswagen ID.4 is the best alternative to the Mustang Mach-E if you want an electric SUV at a lower price.

If you want a more affordable EV Option: 2023 Chevrolet Bolt EUV

Starting price: $27,800
Possible tax credit: $7,500
Maximum range: 247 miles
The 2023 Chevrolet Bolt EUV is affordable, but it doesn’t feel cheap! The top-tier Premier trim only bumps your price tag up to $32,300 (before tax credits) and adds the following luxe features to an already-impressive lineup of standard features:
  • Leather upholstery
  • Heated and ventilated front seats
  • Adaptive cruise control
The performance can’t compete: You won’t find the perky acceleration of the Mustang Mach-E here. Instead, the Bolt EUV managed a respectable 6.8-second 0 to 60 time with the following powertrain specs:
  • Maximum 200 horsepower and 266 lb-ft of torque
  • Standard single-motor front-wheel drive (no AWD options)

If you’re not ready to go all-electric: 2022 Ford Escape PHEV

Starting price: $40,500
Possible tax credit: $3,750
Maximum all-electric range: 37 miles
The
Ford Escape PHEV
is an excellent and affordable alternative to the Mach-E if you’re not quite ready to go all-electric—and you’ll still qualify for a partial tax credit!
Huge fuel savings: The Escape PHEV manages 40 miles to the gallon combined in hybrid mode after it’s exhausted its 37 miles of all-electric driving. Though you’ll still have to head to the pumps, you can expect some
great savings on gas
.

What you should know about the new federal EV tax credit requirements

The Inflation Reduction Act that was signed into effect by the IRS last year may have removed the 200,000-vehicle sales car, but it added several new restrictions to the federal EV tax credit requirements:
  • Buyer income caps
  • Vehicle price caps
  • Vehicle assembly requirements
  • Battery construction restrictions
When it comes to buyer income and vehicle pricing, the restrictions are pretty straightforward:
  • Income caps for new vehicles: A single buyer must earn no more than $150,000 a year to qualify, and buyers who file jointly may only earn up to $300,000. Heads of household are limited to $225,000. 
  • Income caps for used vehicles: These numbers drop to $75,000, $150,000, and $112,500, respectively.
  • Price limits for new vehicle MSRPs (as listed on vehicle window stickers): $80,000 for SUVs, vans, and trucks or $55,000 for all other vehicles
  • Price limit for used vehicles (based on fair market value): $25,000
The restrictions are also straightforward for final assembly: It has to happen in the U.S., Mexico, or Canada. 
Battery construction requirements: New EVs must meet the following criteria for battery construction to qualify for tax credits:
  • At least 40% of the EV or PHEV battery’s critical minerals must be recycled, extracted, or processed in the U.S. or in a country with which the U.S. has a free-trade agreement
  • At least 50% of the battery’s components must be produced or assembled in North America.
  • As of April 18, 2023, EVs and PHEVs may qualify for partial tax credits if they meet at least one of these requirements.
While no automotive manufacturer met both of these requirements when they went into effect on January 1, 2023, many have since adjusted their battery components to qualify for at least partial tax credit.
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