Rivian Tax Credit Eligibility

Buyers hoping to take advantage of the $7,500 federal tax credit on their Rivian EV had better act fast—January updates will render them ineligible.
Written by Sarah Gray
Reviewed by Alita Dark
Dec 12, 2022
Rivian electric vehicles will be eligible for a $7,500 federal tax credit through the end of December 2022. But price limits and battery material requirements will render them ineligible come January 1, 2023.
The Inflation Reduction Act (IRA) of 2022 added a lot of vehicles back to the list of those eligible for a federal tax credit of up to $7,500. Unfortunately, once all parts of the act go into effect in January, most of those vehicles will become ineligible again—including the
Rivian R1S
and
R1T
. That means you’ll no longer be able to look forward to a $7,500 credit to help offset the Rivian’s super-high
car insurance
costs. Unless you act fast, that is!
If you’re considering a new Rivian luxury electric vehicle (EV) but you’re not sure how the IRA affects your chances of getting the full $7,500 tax refund, just keep reading. We’ve assembled this guide to give you the lowdown on the new federal EV tax credit guidelines and a loophole that could allow you to take advantage of them on a new Rivian even after the start of the new year.

Is the Rivian still eligible for the federal tax credit?

Yes,
Rivian electric cars
are still eligible for the federal tax credit
Still in its infancy, Rivian is far from the original 200,000-vehicle sales cap placed on manufacturers for the federal EV tax credit. That means that the removal of this cap wasn’t big news for the American-made EV brand. 

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

Most EV manufacturers and buyers were focused mainly on the removal of the vehicle sales cap, which is a key aspect of the IRA. However, the act also includes new restrictions on buyer income, vehicle price, vehicle assembly, and battery construction that have Rivian execs downright annoyed.
While many manufacturers are worried about the battery construction requirements of the IRA, Rivian is more concerned with buyer income and vehicle pricing restrictions. Rivian is a luxury EV manufacturer, and that’s reflected in their vehicle prices—it’s also reflected in their buyers. Those with the disposable income available to spring for a Rivian will likely sit well above the income limits set by the new IRA:
  • For new vehicles, single buyers can earn no more than $150,000 a year, and buyers filing jointly must earn less than $300,000 annually. Heads of household are limited to $225,000
  • For used vehicles, these numbers drop to $75,000, $150,000, and $112,500, respectively.
That’s not to say that buyers falling within these income guidelines couldn’t afford a Rivian—it’s just that they don’t make up the manufacturer’s primary market. Adding insult to injury, even if a buyer falls within the income limits, Rivian’s pricing will keep it off the list of EVs eligible for a full tax credit come 2023:
  • New SUVs, vans, and trucks must be priced under $80,000, and all other vehicles must cost less than $55,000.
  • Used vehicles must be priced under $25,0000.
A new Rivian R1S SUV sports a starting MSRP of $91,075, taking it out of the running for the credit. The R1T, on the other hand, has a comparatively low starting MSRP of $79,500. That means buyers can still get the credit on the R1T, right? Not exactly. The sub-$80,000 MSRP is for the base R1T Explore, which is no longer available. That leaves the uplevel Adventure, with its $85,000 starting MSRP. But there’s still more to consider when it comes to what’s keeping Rivian from federal tax credit eligibility.
The restrictions on final assembly are pretty straightforward: it has to happen in the U.S.,
Mexico
, or Canada. Rivian’s sole production facility is in
Normal, Illinois
, so they’re not worried about this restriction.
But now we come to the other aspect of the IRA that will knock the Rivian R1T off the full tax refund list as of 2023—battery construction. Starting in 2023, 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. Plus, the same U.S. or free-trade requirement will apply to at least 50% of the battery’s components.
Currently, no EV or PHEV on the market meets both of these requirements. While Rivian comes closer to this minimum than any other current EV manufacturer, they’re still not slated to actually break the threshold for full-refund qualification until 2025. In other words, unless battery manufacturing practices change significantly in the next two months, no vehicles will qualify for the full tax credit come January 2023.
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Other electric vehicle incentives

While this isn’t the best news for Rivian or for anyone interested in buying a Rivian, there is a bright side here. The federal EV tax credit isn’t the only incentive available to EV buyers. Depending on where you live, your state may also offer a tax incentive for EV purchases, and many local electric companies and co-ops offer rebates and incentives to EV buyers as well.

Is the Rivian still worth buying? 

You might be asking yourself, why bother? If I can’t get a tax incentive for buying a Rivian, is it still worth it? As with anything to do with buying a new vehicle, we have to say it depends.
Let’s take a closer look:
Car and Driver places both Rivian models on their Editors’ Choice list for 2022, the R1T earning a solid 10/10 and the R1S coming in a little behind with an 8.5/10. The folks at Edmunds haven’t rated the R1S, but they gave the R1T a “great” rating of 8.4/10
When it comes to EV cars, most people are blown away by their acceleration, but when it comes to trucks, buyers are often more interested in towing and payload capacity—both of which are pretty impressive for Rivian. The R1T truck boasts a max towing capacity of 11,000 pounds, and it can haul up to 1,800 pounds of payload. 
The R1S also puts up some pretty respectable numbers in this arena. Max towing capacity for the SUV is 7,700 pounds, and the R1S’s max payload is roughly equivalent to the R1T’s.
Along with stellar towing and payload capacity, Rivians all come equipped with standard all-wheel drive (AWD), but Rivian ups the ante here by adding an optional four-motor AWD that allows the Rivian to perform “tank turns” by rotating two wheels on one side forward while the wheels on the other rotate backward. In other words, a Rivian equipped with four-motor AWD can spin around 360 degrees without moving forward or backward. 
Bottom line: if you have the disposable income to afford a Rivian EV, it’s definitely worth considering. But if you’re not quite convinced, let’s take a look at some other options.

What to buy instead of a Rivian 

Until fairly recently, EV buyers didn’t have a lot of options when it came to trucks, but the segment is finally starting to take off. Where crossovers and SUVs are concerned, though, the field is brimming with options.
Let’s take a look at some of your options.

If you want the best-rated EV all around: 2022 Hyundai Ioniq 5

Starting price: $42,745
Possible tax credit: $7,500
Maximum range: 303 miles
The 2022 Hyundai Ioniq 5 is the best all-around EV for 2022, bar none. Obviously, it’s no truck, so this would be a great option to consider if you’d originally been thinking of a Rivian R1S SUV. Not only does it slay with a perfect 10/10 rating from Car and Driver, but it was also named
Car and Driver’s EV of the Year for 2022
. Still not convinced? It also snagged a
triple win at the 2022 World Car Awards
, taking home the badge for World Car of the Year, World Electric Vehicle of the Year, and World Car Design of the Year
So how about that tax credit? Yes! The Hyundai Ioniq 5 does still qualify for the full $7,500 credit—at least until the start of the new year.
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Looking for an EV Truck option?: 2022 Ford F-150 Lightning

Starting price: $41,769
Possible tax credit: $7,500 after January 1
Maximum range: 320 miles
That’s right, America’s favorite truck has gone electric—and the people love it. Plus, only the top-tier Platinum Extended Range Lightning is priced above the cap for trucks set by the new IRA. That means
Ford F-150 Lightning
buyers will have five trims to choose from, each potentially eligible for a tax credit. Granted, a full tax credit will only be possible if Ford can sort out battery construction issues by the 1st—which is highly unlikely. 
But that doesn’t mean the Lightning isn’t still a great alternative to the Rivian R1T. It offers a comparable towing capacity of up to 10,000 pounds and a payload capacity of up to 2,000 pounds. Though the Lightning can’t negotiate a Rivian-style tank turn, it does feature standard AWD and loads of available luxury options, like massaging front seats and onboard scales to weigh your payload.

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

Starting price: $39,995
Possible tax credit: $7,500
Maximum all-electric range: 37 miles
Rivian doesn’t offer any plug-in hybrid (PHEV) options, so you’ve got a wide variety of both makes and models to choose from if you’re not quite ready to go all-electric. Since we’re talking EV tax credits here, you might consider the Ford Escape PHEV as an alternative to the Rivian R1S. Not only is it exponentially more affordable than the R1S, but it also may still be available for the full tax credit in the new year. 
Just because the Escape PHEV isn’t all-electric doesn’t mean you can’t still have the chance to enjoy gas-free travel. When fully charged, an Escape PHEV can travel up to 37 miles on battery power. Once that’s depleted, it still gets 40 mpg combined in hybrid mode!
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