EV Vehicle Credit

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.

Who Qualifies

You may qualify for a credit up to $7,500 if you buy a new, qualified plug-in EV or fuel cell electric vehicle (FCV) for your own use, not for resale and use it primarily in the U.S. The credit is available to individuals and their businesses. In addition, your modified adjusted gross income (AGI) may not exceed:
  • $300,000 for married couples filing jointly
  • $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 two years, you can claim the credit.

The credit is nonrefundable, 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

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 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

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.
    • FCVs do not need to be made by a qualified manufacturer to be eligible.
  • Undergo final assembly in North America
  • Meet critical mineral and battery component requirements (as of April 18, 2023).

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, Qualified Plug-in Electric Drive Motor Vehicle Credit (Including Qualified Two-Wheeled Plug-in Electric Vehicles) with your tax return. You will need to provide your vehicle’s VIN.

Be sure to consult with your tax professional to analyze your specific tax situation. At Taxperts, we can assess your small business structure and suggest ways to increase your savings. Check out our website, Facebook page, or LinkedIn page to learn more.

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