It depends.
Minnesota nor the IRS have issued any guidance as to the taxability of any Minnesota state EV rebates on the purchase of an electric vehicle. Minnesota has indicated that whether the payment is taxable or not would depend upon your individual situation per this link.
Since the rebate is not guaranteed, and is only issued if the appropriate paperwork is submitted and funds are still available in the state of Minnesota, then this rebate is technically income and most likely would be taxable on your federal and state returns.
As a general guide, if the rebate is issued from the manufacturer upon purchase of vehicle, the rebate would typically reduce your basis in the vehicle. Please see this excerpt from IRS Publication 525 for more details on this possibility.
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