Does the CR-V Hybrid Qualify for a Federal Tax Credit? (2024)

If you’re considering purchasing the CR-V Hybrid, you might be wondering if it qualifies for a tax break.

Federal tax credits primarily apply to electric vehicles and, in some cases, hybrid models. However, recent changes to these credits in the United States have added some complexity. To learn more, keep reading this article for the details.

About Federal Tax Credit

The EV Tax Credit is a non-refundable credit offered for purchasing qualifying electrified vehicles. The credit ranges from $2,500 to $7,500, depending on the vehicle’s specifications and the number of units sold by the manufacturer.

To qualify for the EV Tax Credit, certain requirements and rules must be met. These requirements have become increasingly complex and intricate over the years, making it challenging to determine if your vehicle qualifies due to the ever-changing regulations.

The Inflation Reduction Act (IRA) introduced new rules effective from 2023 through 2032. Under these regulations, changes have been made to vehicle types, income thresholds, and manufacturing requirements.

According to the updated rules, new electric vehicles may qualify for a maximum credit of $7,500, while used electric vehicles may receive up to $4,000, capped at 30% of the car’s purchase price.

(kiplinger)

This video from Edmunds Cars provides a deeper explanation of the EV Tax Credit:

Qualification Status

To qualify for the federal tax credit, an electric or plug-in hybrid vehicle must meet the following criteria:

• The vehicle must be purchased between January 2023 and December 2032.
• 50% of critical minerals must originate from North America or free trade agreement countries (increasing to 60% in 2025, 70% in 2026, and 80% from 2027).
• 50% of battery components must be sourced from North America or free trade agreement countries (increasing gradually to 100% by 2029).
• Battery capacity of at least 7 kWh.
• Final assembly in North America.
• Gross vehicle weight rating under 14,000 pounds.

The new rule also removes the credit limit for automakers that have sold over 200,000 electric vehicles. This change allows manufacturers like Toyota, GM, and Tesla, which previously lost eligibility, to qualify for the credit again under the updated regulations.

In addition to the vehicle qualification, the buyer must also meet the following criteria:

• The vehicle must be purchased for personal use, not for resale
• The vehicle must be primarily used within the United States
• Individuals must have an adjusted gross income (AGI) of $150,000 or less.
• Heads of household must have an adjusted gross income (AGI) of $225,000 or less
• Married couples filing jointly must have a Modified Adjusted Gross Income (MAGI) of $300,000 or less.

The regulations mentioned above apply to the purchase of new electric vehicles. If you’re considering buying a used EV, there is a separate set of rules, outlined below:

• The credit applies to 30% of the sale price, with a maximum limit of $4,000.
• You must be an individual purchasing the vehicle for personal use, not for resale.
• You cannot be the original owner of the vehicle.
• You cannot be claimed as a dependent on another person’s tax return.
• You must not have claimed another used clean vehicle credit within the three years prior to the purchase date.
• Income must fall under the new guidelines: $75,000 for individuals, $112,500 for heads of household, and $150,000 for joint filers.
• Purchase price must be $25,000 or less.
• Must be at least two model years older than the year of purchase.
• Not previously transferred to a qualified buyer after August 16, 2022.
• Primarily used in the United States.
• Gross vehicle weight rating must be less than 14,000 pounds.
• Battery capacity of at least 7 kWh.

These guidelines can be a bit confusing. For more detailed information, I suggest reaching out to your local dealership.

Why Doesn’t the CR-V Hybrid Qualify For Tax Credit?

The main reason the Honda CR-V Hybrid is not eligible for the tax credit is that it is not a plug-in model. Additionally, the CR-V’s battery capacity is only 1.06 kWh, which is far below the requirement of at least 7 kWh for eligibility.

Even if Honda decides to introduce the Honda CR-V plug-in hybrid currently marketed only in Europe, it may still not meet the requirement of 50% critical minerals and battery components.

However, since Honda has established a battery manufacturing facility in Ohio, there is a strong likelihood that, in the future, Honda will offer a CR-V plug-in hybrid that qualifies for tax credits in the United States.

When Can You Get a Tax Credit For a Traditional Hybrid Vehicle?

It is difficult to predict whether future CR-V hybrids will qualify for federal tax breaks. With the current, and constantly evolving, regulations, no hybrid car without a plug-in capability qualifies.

As regulations become increasingly stringent, I do not expect a traditional hybrid like the CR-V hybrid to qualify. In fact, it’s possible that even plug-in hybrids may not be eligible in the future.

Alternatives That Qualify

If the CR-V Hybrid’s tax credit status has you second-guessing your decision, you might want to explore other options.

There are plenty of excellent alternatives to the CR-V Hybrid that qualify for federal tax credits and could be worth considering.

It is important to note that most of the vehicles listed above have very different characteristics compared to the Honda CR-V. Be sure to review their specifications in detail before making a decision.

If the CR-V Hybrid remains your preferred choice, it’s perfectly reasonable to overlook the tax credit and go with the CR-V. It still offers good value at a reasonable price.

Conclusion

Despite not qualifying for federal tax breaks, the CR-V Hybrid remains one of the top SUVs on the market. With a very reasonable price, abundant features, impressive fuel economy, and outstanding reliability, there’s no denying the CR-V Hybrid’s quality and value.

If you’re considering another Honda that qualifies for the tax credit, the only option is the Honda Prologue. It’s a solid EV, but even with the tax credit, its price is significantly higher than the CR-V.

For now, we must accept that the CR-V Hybrid doesn’t come with tax incentives. However, once you get behind the wheel, you probably won’t mind at all.