There are four types of EV tax credits available

  • Section 30D of the Internal Revenue Code – New Clean Vehicle
  • Section 45W of the Internal Revenue Code- Commercial Clean Vehicles
  • Section 25E of the Internal Revenue Code – Previously Owned Clean Vehicles
  • Section 30C of the Internal Revenue Code – Alternative Fuel Vehicle Refueling Credit

 

Qualified Manufacturers include

  • Audi
  • BMW
  • Ford
  • GM (GMC, Chevrolet, Buick, Cadillac)
  • Hyundai
  • Jaguar Land Rover
  • Kia
  • Mazda
  • Mercedes Benz
  • Mitsubishi
  • Proterra
  • Rivian
  • Stellantis (Chrysler and Jeep Brands)
  • Tesla
  • Toyota
  • Volkswagen
  • Volvo

 

Section 30D: Applies to any new BEVs, PHEVs, and FCEVs less than 14,000 pounds and powered by a motor with a capacity of 7 kilowatt hours or more placed in service on or after January 1, 2023

    • Different requirements for vehicles prior to 1/1/23
  • Must have final assembly in North America
  • The tax credit is claimed in the tax year the vehicle is placed in service (for example, if you order the vehicle in 2023 but it isn’t delivered to you until 2024, the tax credit would apply for that year)
  • Eligible vehicles qualify for a tax credit of up to $7,500.00
  • Household income limits of $300,000.00 in joint households, $225,000.00 for head of household, and $150,000.00 for all other taxpayers
  • Price limits on vehicles that qualify:
    • $80,000.00 for vans
    • $80,000.00 for sport utility vehicles
    • $80,000.00 for pickup trucks
    • $50,000.00 for other vehicles
  • Price limit is based on the MSRP of the vehicle. Does not include designation charges, or optional add-ons, or taxes and fees

 

WHAT MUST A SELLER DO? Seller must provide certain info on a Tax Credit Seller Report, including:

  • Name and TIN of seller
  • Name and TIN of buyer
  • VIN of the vehicle
  • Battery capacity of the vehicle
  • Verification that the taxpayer is the original user of the vehicle
  • The date of the sale and sales price of the vehicle
  • Max credit allowable of the vehicle
  • For sales after 12/31/23, the amount of any transfer credit applied to purchase
    • “Starting in 2024, the Inflation Reduction Act establishes a mechanism that will allow car buyers to transfer the credit to dealers at the point of sale so that it can directly reduce the purchase price.”
  • Declaration under penalty of perjury from seller and buyer
  • Use this FORM
  • Seller MUST provide this report to the taxpayer no later than the date the vehicle is purchased
  • Seller MUST also file reports to the IRS within 15 days after the end of the calendar year
  • Starting in 2024, qualifying vehicles cannot have battery components manufactured or assembled by a foreign entity of concern
  • Starting in 2025, qualifying vehicles cannot contain minerals extracted, processed, or recycled by a foreign entity of concern

 

Section 25E: Applies to previously-owned clean vehicles

  • Previously-owned clean vehicles is a vehicle with the following requirements:
    • Model year of vehicle is at least 2 years earlier than the calendar year in which a taxpayer acquires the vehicle
    • Purchasing taxpayer is not original user of vehicle
    • Acquired for a sales price of $25,000.00 or less
    • Gross weight of less than 14,000 pounds
  • The amount of the credit is the lesser of $4,000.00 or an amount equal to thirty (30) percent of the sales price of the vehicle
  • Household income limitations of $150,000.00 for joint filers; $112,500 for head of household and $75,000 for all other filers
  • A seller MUST provide the taxpayer with a similar form as the one in 30D with same deadlines
  • Use this FORM

 

Section 45W: Applies to Commercial Clean Vehicles Credit

  • This is a vehicle that:
    • Made by a qualified manufacturer
    • Acquired for use or lease and not for resale
    • Manufactured primarily for use on public streets and highways
    • Has a battery capacity of as least 15KWH (Or 7KWH if less than 14,000 pounds)
  • The amount of credit is the lesser of 15 percent of the taxpayer’s tax basis in the vehicle (30 percent in the case of a vehicle not powered by gasoline/diesel internal combustion engine) OR the incremental cost of the vehicle
    • Incremental cost – the excess of the purchase price of a qualified commercial clean vehicle over the price of a comparable gasoline or diesel internal combustion engine vehicle
  • The credit is limited to $7,500.00 for vehicles with a weight of less than 14,000 pounds, $40,000.00 for all other vehicles
  • To be eligible for the full $40,000.00 tax credit:
    • The qualified vehicle MUST be a Battery Electric Vehicle or Fuel Cell Electric Vehicle of 14,000 pounds or more with an MSRP of at least $133,333.00
    • OR a Plug-In Hybrid Vehicle of 14,000 pounds or more with an MSRP of at least $266,666.00
  • Whether a commercial vehicle constitutes a sale or a lease is a question of fact based on a multitude of factors found HERE
  • There are other issues that are awaiting IRS clarification such as:
    • “Purchase price” and “basis”
  • Cannot combine with the credits available under Section 30D
  • IRS is in process of creating a form for dealers and buyers

 

Section 30C: Provides a tax credit for alternative fuel vehicle refueling and charging property in low-income and rural areas

  • Alternative fuel includes electricity, ethanol, natural gas, hydrogen, biodiesel, etc
  • Fueling equipment for alternative fuel biodiesel is eligible for a tax credit of 30% of the cost, not to exceed $100,000.00
  • They must be installed in locations where:
    • A population census tract where the poverty rate is at least 20% OR
    • Areas where the median family income is less than 80% of the state medium income level
  • Tax Form available on IRS website