2023, the IRS has implemented a revamped tax credit for electric vehicles. While this isn’t entirely new—formerly known as the Plug-In Electric Drive Motor Vehicle Credit—the IRS has rebranded it as the Clean Vehicle Tax Credit under the Inflation Reduction Act. With this change comes a new set of qualification criteria you’ll want to understand before claiming the credit. TaxGlobal’s AI-powered Q&A engine, Taby, is here to guide you through the details.
What is the Clean Vehicle Tax Credit?
The Clean Vehicle Tax Credit offers a financial incentive for purchasing an electric vehicle within the current tax year. The credit amounts to $7,500 for a new electric vehicle and $4,000 for a used one.
How Do I Qualify for the Clean Vehicle Tax Credit?
To be eligible, your vehicle must meet specific battery capacity and type requirements. Eligible vehicles include:
- All-electric vehicles
- Hydrogen fuel cell vehicles
- Plug-in hybrid vehicles
Additional Criteria for New Vehicles:
- The purchase price must be under $55,000 for cars and under $80,000 for vans, SUVs, or pickups.
- The vehicle must be assembled or have received final assembly in North America.
- The vehicle’s gross weight must be under 14,000 lbs.
- An eligible manufacturer must produce it.
- Your modified Adjusted Gross Income (AGI) should not exceed $300,000 if married filing jointly, $225,000 as head of household, or $150,000 if filing single.
Additional Criteria for Used Vehicles:
- The purchase price must be under $25,000.
- Your modified AGI should not exceed $150,000 if married filing jointly, $112,500 if filing as head of household, or $75,000 if filing single.
When purchasing the vehicle, the seller must provide all necessary information to confirm the vehicle’s eligibility for the credit. For more details, you can refer to the IRS guidelines.