Qualifying For The New Clean Vehicle Credit

This year, the IRS is offering a new tax credit to taxpayers who purchase plug-in electric vehicles (EVs) or fuel cell vehicles (FCVs) from qualifying manufacturers. Known as the clean vehicle tax credit, taxpayers will be eligible for the credit if they purchase a new car in 2023 or later. To learn more about the eligibility requirements for this credit, reach out to our tax return preparation legal team today.

Who is Eligible for the New Clean Vehicle Credit?

Taxpayers can qualify for a credit of up to $7,500 if they purchase a new plug-in EV or FCV this year. However, to be eligible, a person must:

• Have purchased the vehicle for his or her own use and not for resale; and
• Use the vehicle primarily in the U.S.

Furthermore, to claim the credit, a taxpayer’s modified adjusted gross income (AGI) can’t exceed:

• $300,000 for married couples who file joint tax returns;
• $225,000 for those who file as the heads of their households; and
• $150,000 for all other tax return filers.

When calculating their AGI, taxpayers can use the number from the year they actually took delivery of the vehicle, or the year before, depending on which is less. As long as a modified AGI falls below the threshold in one of those two years, a person will qualify for the credit. It’s also important to note that the clean vehicle credit isn’t refundable, so taxpayers can’t receive more in the credit than they owe in taxes.

What is a Qualifying Vehicles?

To qualify for the new clean vehicle credit, a car must meet a certain standard, meaning that it:

• Has a battery capacity of at least seven kilowatt hours;
• Has a gross vehicle weight rating of less than 14,000 pounds;
• Was produced by a qualified manufacturer, unless the vehicle is a FCV, in which case, it doesn’t need to be sold by a qualified manufacturer to be eligible; and
• Underwent final assembly in the U.S.

Even if the taxpayer and the vehicle qualify for the credit, however, the sale must still meet certain requirements before a person can actually be eligible for the credit. Under these rules, the sale will only qualify for the credit if:

• The vehicle is new;
• The seller reports the buyer’s name and taxpayer identification number to the IRS at the time of the sale; and
• The vehicle’s suggested retail price doesn’t exceed $80,000 for vans, SUVs, and trucks, or $55,000 for all other vehicle types.

Information related to your vehicle’s weight, battery capacity, and assembly location can all be found on the vehicle’s window sticker.

Claiming the Clean Vehicle Tax Credit

To claim the clean vehicle tax credit, a taxpayer must file Form 8936 with their tax return. In addition to other details about the vehicle and the sale, taxpayers will also need their car’s Vehicle Identification Number (VIN).

Do You Qualify for the Clean Vehicle Credit?

If you are planning on purchasing a new electric vehicle this year, you could be eligible for the amended clean vehicle tax credit. To learn more, reach out to dedicated CPA, former FBI Special Agent, and Florida tax return preparation lawyer Ronald Cutler, P.A. at 386-490-9949 today.

Sources:

irs.gov/credits-deductions/credits-for-new-clean-vehicles-purchased-in-2023-or-after

irs.gov/forms-pubs/about-form-8936