Clean Vehicle Credits
The passing of the Inflation Reduction Act in August brought with it changes to the Electric Vehicle tax credit (rebranded as the “clean vehicle credit”) and added a couple new credits for commercial vehicles and used clean vehicles. The intention of these changes is to further incentivize the adoption of electric, hybrid, and alternative fuel vehicles. However, some of the new rules make claiming these credits more difficult because they require manufacturers to implement large-scale changes to their supply chains and manufacturing. Chief among these are the new requirements that a vehicle must be assembled in the US and a certain percentage of battery materials must come from the US or a country with a Fair Trade Agreement with the US.
Maximum credit for a clean vehicle remains the same at $7,500.
Beginning August 16, 2022 the vehicle must be assembled in North America. This can be determined using the VIN.
MSRP can’t exceed $80,000 for vans, SUVs, and pick-ups. MSRP maximum is $55,000 for all other vehicles.
Individual Income Limits – To be eligible for the credit, Adjusted Gross Income cannot exceed $150,000 for single filers, or $300,000 for joint filers.
The 200,000 vehicles per manufacturer limit no longer applies after the end of 2022. Previously disqualified manufacturers and models, including Tesla, may become eligible again in 2023.
Credit for previously owned clean vehicles: Limited to the lesser of $4,000 or 30% of the sales price. A used vehicle cannot qualify if it is purchased for resale.
Credit for Commercial Clean Vehicles purchased after 12/31/2022: Credit for a qualifying vehicle is limited to the lesser of 15% of purchase price (30% for vehicles not powered by gas or diesel) or the excess cost of the clean vehicle over the cost of a comparable vehicle.
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