Taking Advantage of Clean Vehicle Credit

Switching to an electric vehicle (EV) could make you eligible for a substantial tax credit, benefiting individuals and businesses. By purchasing a new, qualified plug-in EV or fuel-cell electric vehicle, you can qualify for a tax credit of up to $7,500.

To be eligible, you must buy the vehicle for personal use, not for resale, and it must be primarily used within the United States. The credit amount depends on when you place the vehicle in service, not the purchase date.

For vehicles placed in service between January 1 and April 17, 2023, the credit starts with a base amount of $2,500. An additional $417 is added for a vehicle with at least 7 kilowatt hours (kWh) of battery capacity, plus $417 for each kWh beyond 5 kWh. This means the minimum credit is $3,751 for a vehicle with a minimum 7 kWh battery capacity.

For vehicles placed in service from April 18, 2023, onwards, the eligibility criteria include new critical mineral and battery component requirements. You can receive $3,750 if the vehicle meets either the critical minerals requirement or the battery components requirement and up to $7,500 if it meets both.

To qualify for the tax credit, your vehicle must:

Have a battery capacity of at least 7 kWh.
Have a gross vehicle weight rating of less than 14,000 pounds.
Be made by a qualified manufacturer.
Undergo final assembly in North America.
Meet critical mineral and battery component requirements.

Additionally, the vehicle must be new, and the seller must report the necessary information to you and the IRS at the time of sale. The vehicle’s MSRP cannot exceed $80,000 for vans, SUVs, and pickup trucks, or $55,000 for other vehicles.

To claim the credit, file Form 8936 with your next tax return and include your vehicle’s VIN. Ensure you file this in the year you take delivery of the vehicle. For more information, please get in touch with The Center for Financial, Legal, & Tax Planning, Inc. professionals at (618) 997-3436.