Starting in 2010, the federal government introduced an electric vehicle tax credit that would give EV buyers a $2,500 to $7,500 break on their taxes the following year depending on their income and car battery size. The eligibility requirements and regulations for this tax credit have shifted since then per the 2022 Inflation Reduction Act, but Jeep’s two electric models, including its flagship EV Wrangler 4xe, both remain on the list of credit eligibility.

But is the potential for a significant tax credit worth shelling out over $50,000 for the base Jeep Wrangler 4xe model? Could you choose a less expensive EV and still claim the credit?

We’ll go over the current state of the federal EV tax credit (though it seems to be ever-evolving), the advantages and disadvantages of the Wrangler 4xe, and some possible EV substitutes if this model isn’t meeting your needs or expectations.

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Is the Jeep Wrangler 4xe still eligible for federal tax credit?

Yes, the Jeep Wrangler 4xe is still eligible for federal tax credits, even with the new stipulations added in the Inflation Reduction Act.

If you don’t know anything about the electric vehicle federal tax credit, you may need some context first. In 2010, a tax credit for buyers of electric vehicles was proposed and approved by the federal government.

The credit would be for up to $7,500 and would apply to new EV purchases only. Prior to the new Inflation Reduction Act, automakers with more than 200,000 electric vehicles in their sales history were barred from offering the tax credit—so Tesla and GM were the first to go. With the Inflation Reduction Act in place, that sales cap has been eliminated and replaced with strict production and income requirements.

Luckily, the Jeep Wrangler 4xe meets all current eligibility requirements for the federal tax credit. Besides, Jeep only has two EVs currently in its lineup and the 2021 Jeep Wrangler 4xe was its flagship electric model, so it’s safe to say they wouldn’t have reached the 200,000 sales cap yet anyway.

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

Okay, let’s break down the details of the new federal EV tax credit requirements.

Just because there is up to $7,500 in tax credit available for each new EV purchase doesn’t mean each new EV purchaser is going to get all $7,500 of it. Income requirements stipulate that people who file their income taxes individually are only eligible if they make $150,000 or less per year. Those filing head of household have an income cap of $225,000, and folks filing jointly can’t make more than $300,000.

You’ll also need to meet certain pricing requirements. To qualify for the tax credit, the MSRP of any electric SUVs, vans, and trucks needs to be $80,000 or less, while all other vehicles need to be $55,000 or less.

But the real kicker for many EV makers and the things that disqualify most of them are the production requirements. For all $7,500 to be credited, the following must be true:

50% of the battery components are sourced from North America or any nation in the Free Trade Agreement

40% of the critical materials in the vehicle’s battery are sourced from North America or any nation in the Free Trade Agreement

If a vehicle meets both of those standards, the whole $7,500 can be released. If only one of those stipulations is true, the tax credit gets cut in half to $3,750.

Automakers’ eligibility is changing swiftly and everyone is trying to stay on top of who has regained access to the credit, who lost credit, and who remains the same. Jeep, fortunately, retains its eligibility requirements and can offer new Wrangler 4xe buyers the credit.

Other electric vehicle incentives

If you’re feeling powered up by the potential for the $7,500 tax break you could see with buying a new Jeep Wrangler 4xe, you’ll also want to check out other electric vehicle and plug-in hybrid incentives out there.

Many states have their own rebates available for owning EVs and PHEVs and/or installing at-home charging equipment. You’ll need to check with your state’s incentive programs to determine your eligibility and how you can apply.

Residents in the Sunshine State, for example, can take advantage of

Florida electric vehicle incentives

through regional power authorities rather than the state as a whole.

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Is the Jeep Wrangler 4xe worth buying?

While the potential for a $7,500 federal tax credit is enticing, you wouldn’t want to purchase a new vehicle based on that possibility alone. So: is the Jeep Wrangler 4xe worth buying?

As one of only two off-roading plug-in hybrids on the market (the other is also a Jeep), the Wrangler 4xe can take electric vehicles to new terrain. In fact, it’s even been reviewed as having better stability than the gas-powered Wrangler since its low-mounted battery is quite heavy.

And of course, being a plug-in hybrid gives the Wrangler 4xe fuel efficiency. It gets a 49 MPGe combined fuel economy rating and can go 22 miles on just electric power. But once that battery goes, the Wrangler 4xe’s efficiency goes too. It’ll get only 20 mpg, whereas the gas-powered Wrangler gets 22 to 23 mpg combined.

However, there may be a major cause for concern with the Jeep Wrangler 4xe. Jeep has issued recalls on almost 63,000 Wrangler 4xes for unexpected engine shutdowns—meaning the engine just turned off with no warning.

A definite cause of the problem has not been identified yet, but Jeep thinks the issue lies with the transmission control module and auxiliary hybrid control processor. They have been able to remedy the engine shutdowns by recalibrating the systems and updating the software. So far, Jeep is aware of two accidents and one injury that may be related to the recall.

Until this issue gets sorted out, that $7,500 tax credit might not be worth it. And if you’re already a Jeep Wrangler 4xe owner, be sure to check for any safety issues with and recalls for your vehicle on the

National Highway Traffic Safety Association (NHTSA) recall website

—all you need is your VIN.

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What to buy instead of a Jeep Wrangler 4xe

If the engine-related recall turned you off from the Jeep Wrangler 4xe or you just want to keep your options open, there are still lots of all-electric or hybrid electric vehicles available.

True, Jeep currently makes the only off-roading EVs (and the Grand Cherokee 4xe is even more expensive than the Wrangler 4xe), but if you’re open to other EV SUVs, check out these alternatives.

If you really want the federal tax credit: 2022 Ford Escape PHEV

Starting price: $36,950

Possible tax credit: $7,500

Still on the hunt for that federal tax credit? The 2022 Ford Escape PHEV still has tax break eligibility and is all-around more affordable than the $54,735 MSRP Wrangler 4xe. It sports a roomy and comfortable cabin, though it doesn’t have an all-wheel drive option for the drivetrain.

Regardless, its efficiency is still something to herald, with an EPA-estimated 37 miles of electric driving range and a gas/electric fuel economy that makes it to about 40 MPGe.

MORE: Is the 2022 Ford Escape plug-in hybrid a good car?

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

Starting price: $35,975

If you like the price tag of the Ford Escape PHEV but can’t give up AWD, you may want to check out the Hyundai Tucson plug-in hybrid option. It’s still around that mid $30k cost mark and reviews praise its interior comforts.

But first things first: efficiency. One charge of the 2022 Tucson PHEV can take you 33 miles, and you’ll get a whopping 80 MPGe combined. Another great selling option for this electric Hyundai is the included warranties:

Limited warranty: five years or 60,000 miles

Powertrain warranty: 10 years or 100,000 miles

Complimentary maintenance: three years or 36,000 miles

MORE: Is the 2022 Hyundai Tucson plug-in hybrid a good car?

If you’re ready to go all-electric: 2022 Hyundai Ioniq 5

Starting price: $41,245

Maximum range: 303 miles

Perhaps you’re looking to bypass hybrids and plug-in hybrids altogether and get straight into the all-electric community—try the 2022 Hyundai Ioniq 5. While it isn’t included in the group of EVs eligible for a federal tax break, it’s still on the relatively affordable side.

And with a max driving range of 303 miles, charging speed up to 350kWh, and the potential for 320 ponies, that’s not too bad of a price. Car and Driver even named it the 2022 EV of the Year!

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