Hyundai Ioniq 5 Tax Credit Eligibility

The Hyundai Ioniq 5 is no longer eligible for a federal tax credit, but new owners may still qualify for local tax incentives or rebates.
Written by Brittni Brinn
Reviewed by Pat Roache
Thanks to the Inflation Reduction Act of August 16, 2022, the
Hyundai Ioniq 5
is no longer eligible for a federal tax credit. 
  • The Hyundai Ioniq 5 is no longer eligible for the $7,500
    federal electric vehicle tax incentive
  • Other changes to the federal EV tax credit requirements include income limits, price caps for new and used EVs, and new battery material restrictions.
  • The Ioniq 5 is still worth considering, especially with its Car and Driver Editors’ Choice accolade and 303-mile maximum driving range.

The Hyundai Ioniq 5 isn’t eligible for federal tax incentives

Unfortunately, the Hyundai Ioniq 5 is no longer eligible for federal tax credits. 
The new electric vehicle eligibility rules set out in the Inflation Reduction Act (IRA) removed electric vehicles assembled outside of North America, including the Ioniq 5, from the federal clean vehicle credit.
There has been a fair amount of pushback to this bill, as
is dedicated to its American market and has invested $5.5 billion in a plant in Georgia that will produce batteries and EVs. Time will tell if an agreement will be made to put the Ioniq 5 back on the list of eligible EVs.
Bottom line: Due to rules set out in President Biden’s Inflation Reduction Act of 2022, the Hyundai Ioniq 5 is no longer eligible for a federal EV tax credit.

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

Electric vehicles with final assembly completed in North America have more hoops to jump through to qualify for the new federal EV tax credit. The new federal EV tax credit requirements include:
  • Income limits: Qualifying single buyers must make under $150,000 a year, while those filing jointly must make under $300,000 annually. 
  • Price caps: As of 2023 EV sedans under $55,000 will qualify for tax credits, while larger new vehicles, like pickup trucks and SUVs will need to sell for under $80,000. The used vehicle price cap is $25,000, regardless of the car’s body type. 
  • Battery material restrictions: EV batteries must contain a certain percentage of materials sourced from North America or a U.S. free-trade partner—plus, the battery has to be made in North America. There are currently no EVs that match these requirements.
  • Manufacturing cap: The 200,000 vehicle cap for automakers still applies.  

Other electric vehicle incentives

The Hyundai Ioniq 5 may not be eligible for the federal EV tax credit, but there are other state incentives and rebates for electric vehicles and plug-in hybrids that reduce local emissions. Some of these programs will provide a rebate if you purchase an EV or will help with the cost of installing or upgrading a home charger. 
Examples of state-level EV tax rebates and incentives include:

The Hyundai Ioniq 5 is still a good buy 

The Ioniq 5 is undoubtedly an excellent EV crossover option. The 2023 Ioniq 5’s starting price of $41,450 MSRP puts it in the middle of the pack when it comes to EV affordability: about half the price of a luxury Polestar 3 SUV, but pricier than a Volkswagen ID.4 or Chevrolet Bolt.
Car and Driver awarded the electric SUV (EUV) an Editors’ Choice accolade and named it the #1 EV of the Year for the 2022 model. Key features include:
The Ioniq 5 is a top choice if you’re in the market for a new EV. But if the sticker price is a little daunting, or even if you just want to cover all your options before heading to the dealership, here are some alternatives. 

What to buy instead of a Hyundai Ioniq 5

It seems like everyone from
has an EV or PHEV on the market for the 2023 model year. But which models can compete with the Ioniq 5, and are any of them eligible for a federal tax credit?
If you’re looking for an EV the IRS reports will
still qualify for federal tax credits
, these are some options you’re likely to encounter:
With a few options on the table, let’s consider the models that are the best alternatives for the Ioniq 5.

If you really want the federal tax credit: 2022 Ford Mustang Mach-E

Starting price: $44,995
Possible tax credit: $7,500
Mustang Mach-E
is currently on the eligibility list for the federal EV tax credit. The Mach-E is a striking crossover with between 211 and 305 miles of range, depending on the battery pack and motors you choose.
With this athletic battery electric SUV, you’ll also get suave interior features like:
  • Customizable ambient lighting
  • Heated front seats
  • Heated steering wheel
  • Wireless charging
  • Panoramic sunroof.
Even though it has a higher price tag than the Hyundai Ioniq 5, the tax credit can help offset the cost, leaving you to enjoy your sporty, sophisticated, and eco-friendly Mach-E. 

If you just want a great EV: 2022 Kia EV6

Starting price: $42,695
Kia EV6
is the natural rival of the Hyundai Ioniq 5. Even though the two models share the same ride platform and electronic components, there are still some major differences. With a sleeker build, more in-cabin storage, and upscale features for a lower price point, the EV6 has a lot to offer.
EV6 also offers a more extended range than the Ioniq 5: 
  • Rear-wheel drive with the standard battery: 232 miles
  • All-wheel drive with the long-range battery: 274 miles
  • Rear-wheel drive with the long-range battery: 310 miles 

If you’re open to a plug-in hybrid: 2022 Toyota RAV4 Prime Plug-In Hybrid

Starting price: $30,910
Maximum range: 42 miles
Instead of going full EV, you may want to consider a plug-in hybrid (PHEV) like the
Toyota RAV4 Prime
. Not only is the price tag a little easier to swallow, but you’ll have more flexibility when it comes to how you want to power your SUV.
Although Toyota EVs and PHEVs no longer qualify for the federal tax credit—having exceeded the eligibility cap—there’s still a lot to enjoy about the RAV4 Prime. Standard features include:
  • Apple CarPlay and Android Auto
  • Onboard Wi-Fi hotspot
  • Lane-departure warning with lane-keeping assist and adaptive cruise control. Y
You’ll also save tons on gas money with an EPA rated fuel economy of 94 MPGe combined. For a more affordable and spacious option, the RAV4 Prime should be on your radar.
is an amazing app. Thanks to it, I saved a lot of money for my Tesla Model 3’s insurance. I’m so glad I downloaded the app!” —Erza S.
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