Per the 2022 Inflation Reduction Act, the Volkswagen ID.4 only qualifies for half of the federal tax credit. While it’s assembled in North America, not enough of the battery components and/or critical materials are sourced from North America for it to qualify fully.

The Inflation Reduction Act of 2022 offers tax credits for qualifying electric, hybrid, or plug-in hybrid vehicles
The federal tax credit is worth up to $7,500
The
Volkswagen ID.4
is eligible for half of the federal EV tax credit

MORE:

How to save on Volkswagen ID.4 insurance costs

How does the federal EV tax credit work?

When the

Biden Administration

got on board with electric vehicles, it developed a number of ways to support the new industry and incentivize drivers to make the switch. One of them was a $7,500 tax credit.

The tax credit is not a discount—instead, it goes against your tax bill at the end of the year. You can only claim against what you owe, so anyone with a bill lower than $7,500 will save a little less than that on their EV.

Under new tax credit terms, a vehicle qualifies if they meet the following criteria:

Assembled in North America

Made with 40% of its critical minerals and 50% of its battery components from North America or a nation in the Free Trade Agreement

One of 200,000 eligible units produced by the automaker

MSRP of less than $80,000 for electric SUVs, vans, or trucks

MSRP of less than $55,000 for any other vehicle

Buyers must also make income requirements to qualify for the tax credit:

Individuals must make $150,000 or less

Heads of household must make $225,000 or less

Couples must make $300,000 or less

Is the Volkswagen ID.4 still eligible for a tax credit?

Volkswagen meets the first and last three credentials to qualify for the federal tax credit. The ID.4 is assembled in North America, is priced at $40,920 MSRP, and to date, less than 20,000 are on the roads.

The ID.4’s battery and critical minerals do not meet the requirements of the federal tax credit. With this said, the ID.4 is eligible for half of the $7,500 tax credit—$3,750.

Other electric vehicle incentives

Many states have implemented their own EV incentives to encourage buyers to make the switch to a non-emissions or low-emissions vehicle.

California

, for example, offers a $7,000 rebate, while

Michigan’s EV incentives

come in the form of utility discounts.

You’ll need to check out the details of your location to see what is available to you, but you may be able to secure some great state rebates and other tax credits for buying an EV or even installing at-home charging equipment.

Is the Volkswagen ID.4 a good electric car?

The ID.4 easily outperforms its older sibling, but in the growing list of EVs available, it has a hard time standing out. Many other models can offer a similar high-200s mile battery range and MPGe for less money, and some in the same price bracket offer over 300 miles on one charge.

Here are a few vehicles worth considering instead of the ID.4:

If you really want the federal tax credit: 2023

Ford Escape PHEV

If you want a great PHEV: 2022 Hyundai Tucson SEL PHEV

If you want to stick to all-electric: 2023 Hyundai Ioniq 5

But for the diehard VW fan, the ID.4 will get you where you need to go without involving any dinosaurs, and the tax credit will make it worth your while.

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