Does the bZ4X qualify for the tax credit?
The short answer is no—the Toyota bZ4X does not currently qualify for the federal electric-vehicle tax credit in the United States under the Inflation Reduction Act. The credit, which can be worth up to $7,500, depends on where the vehicle is assembled and where its battery minerals and components come from, among other rules. As of now, the bZ4X does not meet these conditions in its available production setup.
How the federal EV tax credit works
The Inflation Reduction Act established a consumer tax credit for new clean vehicles, with several eligibility rules designed to favor North American production and supply chains. The credit amount and eligibility hinge on:
- Final assembly location in North America.
- Origin and sourcing of battery minerals (ideally from the United States or a Free Trade Agreement partner).
- Domestic production of battery components or substantial NA content.
- Vehicle price caps and purchaser income considerations that restrict who can claim the credit.
Because these rules are updated and tracked by the Internal Revenue Service, the official IRS Qualified Vehicle List is the authoritative reference for which models qualify in any given year.
Why the bZ4X isn’t eligible (to date)
The bZ4X has not been listed as an eligible model on the IRS’s Qualified Vehicle List for the relevant model years. While the vehicle is competitively priced in the compact SUV segment, eligibility under the IRA depends on production location and battery-supply specifics that have not been aligned for this model. Buyers should verify the current IRS list and consult with a tax professional, as eligibility can shift with new model years or changes in the supply chain.
What would need to change for eligibility
For the bZ4X to qualify, Toyota would need to arrange production and sourcing to meet the IRA’s requirements. Specifically:
- Shift final assembly of the bZ4X to a North American facility or ensure the model meets the assembly criteria under the program.
- Source a sufficient share of battery minerals from the United States or a Free Trade Agreement partner.
- Ensure a substantial portion of battery components are manufactured in North America.
- Maintain the vehicle’s price within the applicable category and comply with any purchaser income rules.
If these conditions are met, the bZ4X could be listed as eligible in future model-year guidance, subject to IRS approval and any subsequent adjustments to the program.
Other incentives and considerations
Even if the federal credit doesn’t apply, buyers may still have access to other incentives at the state, local, or utility level. These can include:
- State or local clean-vehicle rebates or tax incentives.
- Utility company programs offering rebates or discounted charging rates.
- Sales tax exemptions or reductions for electric vehicles in certain jurisdictions.
- HOV lane access or discounted charging programs in some areas, depending on local policy.
Because incentives vary widely by location and can change, it’s important to check with state revenue authorities, local governments, and your dealership for the most current opportunities.
How to verify eligibility and stay informed
To confirm whether a specific bZ4X is eligible for the federal credit, consult the IRS Qualified Vehicle List for the current model year, speak with a tax professional, and verify the vehicle’s VIN and production history with the dealer. Staying up to date is essential, as eligibility can change with policy updates or supply-chain developments.
Where to look for official guidance
Key sources include the IRS website’s QVL page and IRS notice updates, as well as state energy or tax agencies that publish supplemental incentives. Dealerships can also provide model-year-specific eligibility information based on the latest IRS guidance.
Summary
As of the latest guidance in 2025, the bZ4X is not listed as eligible for the federal EV tax credit under the Inflation Reduction Act due to current assembly and battery-sourcing conditions. Eligibility could change if Toyota redoubles North American final assembly, shifts battery supply chains to meet domestic content rules, or if policy criteria are adjusted. In the meantime, prospective buyers should explore state and local incentives and verify the latest IRS guidance before purchasing.
Which EVs qualify for the $7500 tax credit?
Which EVs and PHEVs Are Eligible for a Federal Tax Credit?
| Model Year/Vehicle | Credit Available | Retail Price Cap |
|---|---|---|
| 2024-25 Chrysler Pacifica PHEV | $7,500 | $80,000 |
| 2023-25 Ford F-150 Lightning EV | $7,500 | $80,000 |
| 2026 Genesis Electrified GV70 EV | $7,500 | $80,000 |
| 2026 GMC Sierra EV | $7,500 | $80,000 |
Which Toyota vehicle is eligible for EV tax credit?
According to the IRS, qualifying EVs must undergo final assembly in North America. Currently, Toyota has just one all-electric vehicle, the Toyota bZ4X, which is assembled in Japan. However, you may still be eligible for a Toyota EV tax credit if you lease a new bZ4X instead of purchasing it.
Why is the Toyota bZ4X not selling?
The Toyota bZ4X has struggled to sell due to early and widespread recalls (including a "wheels falling off" issue), poor charging speeds and range compared to rivals, a confusing name, and a design that some find unappealing. While the company has lowered the price and claims to have fixed the software issues, initial negative press has damaged the vehicle's reputation and hurt its sales performance.
Major issues with the bZ4X
- Recalls and reliability concerns: The vehicle launched with a dangerous recall where wheels could detach, which deeply damaged its reputation before sales could even begin. More recent recalls have addressed HVAC and defroster software glitches.
- Poor performance metrics: The bZ4X has a lower driving range and slower charging speeds than many competitors, making it less practical for potential EV buyers.
- Lack of exciting features: Critics have noted that the vehicle's design is either confusing or unappealing, and it lacks the "excitement" or "shock value" of some rivals like the Ford Mustang Mach-E.
- High price point: The initial price was seen as high for the vehicle's range and charging capabilities, though Toyota has since implemented a significant price reduction.
- Brand perception: For a brand known for reliability, the issues and recalls with its first mass-market EV have undermined public trust, a significant hurdle for a new-to-market electric vehicle.
Toyota's response
- Toyota has significantly cut the price of the bZ4X to improve its value proposition and make it more competitive.
- They are continuing to sell it as part of their broader electrified strategy, but it seems to be taking a backseat to their more popular hybrid models.
Is bZ4X eligible for tax credit?
No, the new Toyota bZ4X does not currently qualify for the federal EV tax credit for purchases, as it is not on the list of eligible vehicles. However, if you lease a bZ4X, Toyota may be able to apply the $7,500 tax credit as a down payment to the lease, so check with the dealership about this option.
for purchases
- The Toyota bZ4X does not qualify for the federal tax credit when you purchase it new.
- For 2023 models, the used EV tax credit is only available for vehicles under $25,000 purchased from dealerships, and the 2023 bZ4X is not on the list of eligible used vehicles, according to this Reddit thread.
for leases
- When you lease a new bZ4X, Toyota can apply the $7,500 federal tax credit as a down payment, according to this Reddit thread.
- This is a benefit for the lessee, not a direct tax credit you would claim on your own taxes.
- You will still need to meet the income eligibility requirements for the tax credit.
