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Credits for new clean vehicles purchased in 2023 or after

If you place in service a new plug-in electric vehicle (EV) or fuel cell vehicle (FCV) in 2023 or after, you may qualify for a clean vehicle tax credit. For more information on how to qualify see Publication 5866, New Clean Vehicle Tax Credit Checklist PDF.

At the time of sale, a seller must give you information about your vehicle’s qualifications. Sellers must also register online and report the same information to the IRS. If they don’t, your vehicle won’t be eligible for the credit. For more information see Publication 5905, Information for Consumers Purchasing a New or Used Clean Vehicle PDF.

Find information on credits for used clean vehicles, qualified commercial clean vehicles and new plug-in EVs purchased before 2023.

Who qualifies

You may qualify for a credit up to $7,500 under Internal Revenue Code Section 30D if you buy a new, qualified plug-in EV or fuel cell electric vehicle (FCV). The Inflation Reduction Act of 2022 changed the rules for this credit for vehicles purchased from 2023 to 2032.

The credit is available to individuals and their businesses.

To qualify, you must:

  • Buy it for your own use, not for resale
  • Use it primarily in the U.S.

In addition, your modified adjusted gross income (AGI) may not exceed:

  • $300,000 for married couples filing jointly or a surviving spouse
  • $225,000 for heads of households
  • $150,000 for all other filers

You can use your modified AGI from the year you take delivery of the vehicle or the year before, whichever is less. If your modified AGI is below the threshold in 1 of the 2 years, you can claim the credit.

If you do not transfer the credit, it is nonrefundable when you file your taxes, so you can’t get back more on the credit than you owe in taxes. You can’t apply any excess credit to future tax years.

Credit amount

The amount of the credit depends on when you placed the vehicle in-service (took delivery), regardless of purchase date.

For vehicles placed in-service January 1 to April 17, 2023:

  • $2,500 base amount
  • Plus $417 for a vehicle with at least 7 kilowatt hours of battery capacity
  • Plus $417 for each kilowatt hour of battery capacity beyond 5 kilowatt hours
  • Up to $7,500 total

In general, the minimum credit will be $3,751 ($2,500 + 3 times $417), the credit amount for a vehicle with the minimum 7 kilowatt hours of battery capacity.

For vehicles placed in-service April 18, 2023 and after:

Vehicles will have to meet all of the same criteria listed above, plus meet new critical mineral and battery component requirements for a credit up to:

  • $3,750 if the vehicle meets the critical minerals requirement only
  • $3,750 if the vehicle meets the battery components requirement only
  • $7,500 if the vehicle meets both

A vehicle that doesn’t meet either requirement will not be eligible for a credit.

Qualified vehicles

Click the button below to see if a vehicle is eligible for the new clean vehicle credit.

To qualify, a vehicle must:

  • Have a battery capacity of at least 7 kilowatt  hours
  • Have a gross vehicle weight rating of less than 14,000 pounds
  • Be made by a qualified manufacturer
  • Undergo final assembly in North America
  • Meet critical mineral and battery component requirements (as of April 18, 2023)

The sale qualifies only if:

In addition, the vehicle’s manufacturer suggested retail price (MSRP) can’t exceed:

  • $80,000 for vans, sport utility vehicles and pickup trucks
  • $55,000 for other vehicles

MSRP is the retail price of the automobile suggested by the manufacturer, including manufacturer installed options, accessories and trim but excluding destination fees. It isn’t necessarily the price you pay.

You can find your vehicle’s weight, battery capacity, final assembly location (listed as “final assembly point”) and VIN on the vehicle’s window sticker.

How to claim the credit

To claim the credit, file Form 8936, Clean Vehicle Credits with your tax return. You will need to provide your vehicle’s VIN.

Get a time-of-sale report

The dealer should give you a paper copy of a time-of-sale report when you complete your purchase.

  • Keep this copy for your records because it affirms that the dealer sent a report to the IRS on the purchase date.
  • If you didn’t receive a copy of the report, follow our step-by-step guide.

File Form 8936 with your tax return

You must file Form 8936 when you file your tax return for the year in which you take delivery of the vehicle. This is true whether you transferred the credit at the time of sale or you’re waiting to claim the credit when you file.

If you have questions or concerns, follow our step-by-step guide.

SOURCE

AUTHOR: IRS

Call WXC for more details.