New Requirements Take Effect April 18, 2023
To qualify for the credit, you must purchase a new clean vehicle on or after April 18, 2023, and it must meet certain mineral and battery component standards. This is true even if you purchased the vehicle prior to April 18. Details can be found in Q6 of the Fact SheetPDF under Topic A.
If you put a new plug-in electric vehicle (EV) or fuel cell vehicle (FCV) into service in 2023 or later, you may be eligible for a clean car tax credit and can apply.
Learn about credits for used clean vehicles, eligible commercial clean vehicles, and new plug-in electric vehicles acquired before 2023.
Who is Eligible?
If you purchase a new, qualified plug-in EV or fuel cell electric vehicle (FCV), you may be eligible for a credit of up to $7,500 under Internal Revenue Code Section 30D. The Inflation Reduction Act of 2022 altered the eligibility requirements for this credit for automobiles purchased between 2023 and 2032.
Individuals and corporations can apply for the credit.
To be eligible, you must:
Purchase it for personal use only, not for selling.
It is largely used in the United States.
Furthermore, your modified adjusted gross income (AGI) cannot be greater than:
married couples filing jointly: $300,000
$225,000 for household heads
All other taxpayers are eligible for a $150,000 tax credit.
You can apply your modified AGI from the year you purchase the vehicle or the year prior, whichever is less. You can claim the credit if your adjusted AGI is less than the threshold in one of the two years.
Because the credit is nonrefundable, you cannot get more than you owe in taxes. Any unused credit cannot be carried through to subsequent tax years.
Amount of Credit
Regardless of purchase date, the amount of the credit is determined by when you placed the car in service (took delivery).
For cars placed in service between January 1, 2023 and April 17, 2023:
- $2,500 is the starting point.
- Plus $417 for a vehicle with at least 7 kilowatt hours of battery capacity,
- plus $417 for each additional kilowatt hour of battery capacity above 5 kilowatt hours.
- Up to a total of $7,500
In general, the minimum credit will be $3,751 ($2,500 + 3 times $417), the credit amount for a car with a minimum battery capacity of 7 kilowatt hours.
Vehicles that are qualified
A vehicle must meet the following requirements to qualify:
- Have a minimum battery capacity of 7 kilowatt hours.
- Have a maximum gross vehicle weight of less than 14,000 pounds.
- Be produced by a reputable manufacturer.
FCVs are not required to be manufactured by a recognised manufacturer to be eligible. For more information, see Rev. Proc. 2022-42.
Final assembly will take place in North America.
Comply with essential mineral and battery component standards (by April 18, 2023).
Only the following conditions apply to the sale:
- You purchase a new automobile.
- The seller reports required information to you and the IRS at the time of transaction.
To be eligible to claim the credit, sellers must provide your name and taxpayer identification number to the IRS.
Furthermore, the vehicle's manufacturer suggested retail price (MSRP) cannot be greater than:
- 80,000 dollars for vans, SUVs, and pickup trucks
- $55,000 for additional vehicles
MSRP is the manufacturer's suggested retail price for the vehicle, which includes factory installed options, extras, and trim but excludes destination fees. It isn't always the price you pay.
The weight, battery capacity, final assembly location (given as "final assembly point"), and VIN of your car can be found on the window sticker.
To see if a car qualifies for the new clean vehicle credit, click here
How to Apply for the Credit
Fill out Form 8936, Qualified Plug-in Electric Drive Motor Vehicle Credit (Including Qualified Two-Wheeled Plug-in Electric Vehicles), and include it with your tax return to claim the credit. You must supply your vehicle's VIN.
DISCLAIMER
The information on this page should not be viewed as an official or legally binding document. Other requirements or exceptions may apply. For more detailed information, please consult an IRS tax representative and/or official IRS publications.
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