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IRC § 30D "Clean Vehicle Credit" (formerly "Qualified Plug-in Electric Drive Motor Vehicle Credit")

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The IRC § 30D credit originally was enacted in the Energy Improvement and Extension Act of 2008 and has been amended multiple times in recent years. Previously, IRC § 30D included a "Credit Allowed For 2- And 3-Wheeled Plug-In Electric Vehicles" (expired 1/1/2022). However, the Inflation Reduction Act of 2022 (IRA), Public Law 117-169, amended the IRC § 30D "Qualified Plug-in Electric Drive Motor Vehicle Credit", now known as the "Clean Vehicle Credit" (CVC), and added a new requirement for final assembly in North America that took effect on August 17, 2022, with additional requirements taking place beginning January 1, 2023.

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Credits for New Electric Vehicles Purchased in 2022 or Before

If you bought a new, qualified plug-in electric vehicle (EV) in 2022 or before, you may be eligible for a clean vehicle tax credit (nonrefundable; excess credit does not apply to future tax years) up to $7,500 under Internal Revenue Code Section 30D.

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The credit equals:

• $2,917 for a vehicle with a battery capacity of at least 5 kilowatt hours (kWh)

• Plus $417 for each kWh of capacity over 5 kWh

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Who Qualifies
You may qualify for a credit up to $7,500 for buying a qualified new car or light truck. The credit is available to individuals and businesses.

 

To qualify, you must buy the vehicle: 

• For your own use, not for resale 

• For use primarily in the U.S. 

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Qualified Vehicles
To qualify, a vehicle must:

• Have an external charging source

• Have a gross vehicle weight rating of less than 14,000 pounds

• Be made by a manufacturer that hasn't sold more than 200,000 EVs in the U.S. 

You can find your vehicle's weight on the vehicle's window sticker.

 

Vehicles Purchased After August 16, 2022: New Final Assembly Requirement
If you buy and take delivery of a qualified electric vehicle between August 17, 2022 and December 31, 2022, the same rules apply, plus the vehicle must also undergo final assembly in North America.

To see if your model meets the assembly requirements, check the Department of Energy's page on Electric Vehicles with Final Assembly in North America. On that page you can:

• Confirm the assembly location for your specific vehicle using the VIN Decoder tool under "Specific Assembly Location Based on VIN."

• Check a list of qualifying Model Year 2022 and early Model Year 2023 electric vehicles under "For Vehicles Purchased before January 1, 2023."

Because some models are built in multiple locations, you should check both criteria for any specific vehicle.

 

Purchase date vs. delivery date
If you entered a written binding contract to buy a vehicle after December 31, 2021, and before August 16, 2022, but took delivery on or after August 16, 2022, you may elect to claim the credit based on the prior rules.  To elect the credit under the prior rules you must elect the credit on your 2022 tax return after you take delivery of the vehicle.  Depending on the date the vehicle is delivered, you can claim the credit on your original, superseding, or amended 2022 tax return. 

 

If you purchased a vehicle between August 16, 2022 and December 31, 2022 but don't take delivery of the vehicle until 2023, see Credit for New Clean Vehicles Purchased in 2023 and After. 

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What is a written binding contract?
In general, a written binding contract:

• is enforceable under state law, based on the state and relevant facts and circumstances, and

• does not limit the damages a buyer or seller can receive for a breached contract, such as forfeiting a deposit or paying a pre-determined dollar amount or a percentage of the total contract price for the vehicle.

An indication of a binding contract is if a buyer has made a significant non-refundable deposit or down payment.

 

How to Claim the Credit
To claim the credit for a vehicle you took possession of in 2022, file Form 8936, Qualified Plug-in Electric Drive Motor Vehicle Credit (Including Qualified Two-Wheeled Plug-in Electric Vehicles) with your 2022 tax return. You will need to provide your vehicle's VIN.

 

For Vehicles Purchased Before 2022
If you missed claiming a credit for an electric vehicle purchased before 2022, you may be able to claim it by filing an amended return for the tax year when you took possession of the vehicle.

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The credit for qualified 2-wheeled plug-in electric vehicles expired in 2022. If you bought a 2-wheeled vehicle in 2021, but placed it in service during 2022, you may still be able to claim the credit for 2022. If you bought it after 2021, you can't claim the credit.

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See Instructions for Form 8936 (01/2022).

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In general, if you buy a new plug-in electric vehicle (EV) or fuel cell electric vehicle (FCEV) in 2023 or after, you may qualify for the new CVC tax credit.

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The CVC tax credit enables eligible taxpayers to receive up to $7,500 in income tax credits contingent upon the sourcing requirements are satisfied for each of the critical minerals contained in the clean vehicle's battery and its components. To claim the credit, the taxpayer must

• (1) commence original use of the clean vehicle,

• (2) the taxpayer cannot acquire the clean vehicle for resale,

• (3) the clean vehicle must be made by a qualified manufacturer, and

• (4) the final assembly of the clean vehicle must occur in North America that took effect on August 17, 2022, with additional requirements taking place beginning January 1, 2023.

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For vehicles placed in service on or after January 1, 2023, the Clean Vehicle Credit provisions will be subject to updated guidance from the IRS and the U.S. Department of the Treasury.

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The credit is broken down into two parts.

• (1) Taxpayers may be eligible for up to $3,750 of the credit for the critical minerals, with the credit value depending on the percentage of the critical minerals that were either extracted in the US (or extracted or processed in any country with which the US has a free trade agreement in effect), or recycled in North America.

  • The applicable percentage is 40% for vehicles placed in service before 2024, with the percentage increasing over time.

• (2) Taxpayers may also be eligible for up to $3,750 of the credit for the battery components, depending on the applicable percentage of the value of the battery components that were manufactured or assembled in the US.

  • ​The applicable percentage is 50% for clean vehicles placed in service before 2024, with the applicable percentage increasing over time.

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To qualify for the credit, price caps on the retail price of vehicles (e.g., $80,000 for vans, SUVs and pickup trucks, $55,000 for sedans and others), as well as limitations on taxpayer's adjusted gross income apply, along with exclusions for vehicles that source battery components or critical minerals from foreign entities of concern. Further, taxpayers can elect to transfer credits to an eligible dealer subject to certain requirements. Additionally, certain recapture rules apply.

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Vehicles Placed in Service After December 31, 2022
Beginning January 1, 2023, the Clean Vehicle Credit (CVC) removes manufacturer sales caps, expand the scope of eligible vehicles to include both EVs and FCEVs, and require a traction battery that has at least 7 kilowatt-hours (kWh). However, the available CVC tax credit may be limited by the vehicle’s MSRP and the buyer’s modified adjusted gross income (see below). The CVC provisions also establish criteria for a vehicle to be considered eligible that involve sourcing requirements for critical mineral extraction, processing, and recycling and battery component manufacturing and assembly pursuant to U.S. Department of the Treasury guidance.

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To confirm whether a vehicle is a van, sport utility vehicle, pickup truck or other, see our qualified vehicles and manufacturers. To check online if a specific vehicle meets the requirements for final assembly location, go to the Department of Energy's page on Electric Vehicles with Final Assembly in North America and use the VIN Decoder tool under "Specific Assembly Location Based on VIN."

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The available CVC tax credit amounts to a base amount of $2500 plus, for a vehicle that draws propulsion energy from a battery with at least 7 kWh of capacity, $417, plus an additional $417 for each kilowatt hour of battery capacity in excess of 5 kWh. However, the total tax credit available for a vehicle reach may reach up to $7,500 (not to exceed), contingent upon meeting both the (1) critical mineral ($3,750 credit portion) and the (2) battery component ($3,750 credit portion) requirements under Internal Revenue Code Section 30D

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you buy a new, qualified plug-in EV or fuel cell electric vehicle (FCV). The Inflation Reduction Act of 2022 changed the rules for this credit for vehicles purchased from 2023 to 2032.

The credit is available to individuals and their businesses.

 

To qualify, you must:

• Buy it new for your own use, not for resale

  • The seller reports required information to you at the time of sale and to the IRS. Sellers are required to report your name and taxpayer identification number to the IRS for you to be eligible to claim the credit​

• Use it primarily in the U.S.

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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.

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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

  • 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.

• Be made by a qualified manufacturer. See our index of qualified manufacturers and vehicles.

  • FCVs do not need to be made by a qualified manufacturer to be eligible. See Rev. Proc. 2022-42 for more detailed guidance.

• Undergo final assembly in North America

"Critical Mineral" & "Battery Component" guidance:

• (1) vehicles that meet the critical mineral requirements are eligible for $3,750 tax credit, and

  • Critical Minerals: To be eligible for the $3,750 critical minerals portion of the tax credit, the percentage of the value of the battery’s critical minerals that are extracted or processed in the United States or a U.S. free-trade agreement partner or recycled in North America, must increase according to the following schedule:​

    • Year    Critical minerals minimum percent value requirement

    • 2023 - 40%

    • 2024 - 50%

    • 2025 - 60%

    • 2026 - 70%

    • 2027 & later - 80%​

• (2) vehicles that meet the battery component requirements are eligible for a $3,750 tax credit.

  • Battery Components: To be eligible for the $3,750 battery components portion of the tax credit, the percentage of the value of the battery’s components that are manufactured or assembled in North America must increase according to the following schedule:​

    • Year    Battery components minimum percent value requirement

    • 2023 - 50%

    • 2024 & 2025 - 60%

    • 2026 - 70%

    • 2027 - 80%

    • 2028 - 90%

    • 2029 & later - 100%

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"Vehicle "Final Manufacturer Retail Price (MSRP)" & "Individual Modified Adjusted Gross Income (MAGI)" Requirements Summary:

To be eligible for the CVC tax credit, 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 options, accessories and trim but excluding destination fees. It isn't necessarily the price you pay.

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Only individuals having a modified adjusted gross income (MAGI) below the following thresholds are eligible for the tax credit:

• $300,000 for joint filers

• $225,000 for head-of-household filers

• $150,000 for single filers

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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 one of the two years, you may claim the credit.

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Further guidance on these provisions is pending from the U.S. Treasury and IRS. For more information, including additional eligibility requirements, see the IRS Plug-In Electric Drive Vehicle Credit link..

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(1) Used Clean Vehicle Credit

Beginning January 1, 2023, if you buy a qualified used electric vehicle (EV) or fuel cell vehicle (FCV) from a licensed dealer for $25,000 or less, you may be eligible for a used clean vehicle tax credit (also referred to as a previously owned clean vehicle credit) under Internal Revenue Code Section 25E. The credit equals 30% percent of the sale price up to a maximum credit of $4,000.

 

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.

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Purchases made before 2023 don't qualify.

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Who Qualifies
You may qualify for a credit for buying a previously owned, qualified plug-in electric vehicle (EV) or fuel cell vehicle (FCV), including cars and light trucks, under Internal Revenue Code Section 25E.

 

To qualify, you must: 

• Be an individual who bought the vehicle for use and not for resale

• Not be the original owner

• Not be claimed as a dependent on another person’s tax return

• Not have claimed another used clean vehicle credit in the 3 years before the purchase date

In addition, your modified adjusted gross income (AGI) may not exceed:

• $150,000 for married filing jointly or a surviving spouse

• $112,500 for heads of households

• $75,000 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 income is below the threshold for 1 of the two years, you can claim the credit.

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Qualified Vehicles and Sales
To qualify, a vehicle must meet all of these requirements:

• Have a sale price of $25,000 or less

• Have a model year at least 2 years earlier than the calendar year when you buy it. For example, a vehicle purchased in 2023 would need a model year of 2021 or older.

• Not have already been transferred after August 16, 2022, to a qualified buyer.

• Have a gross vehicle weight rating of less than 14,000 pounds

• Be an eligible FCV or plug-in EV with a battery capacity of least 7 kilowatt hours

• Be for use primarily in the United States

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See IRS "Manufacturers and Models of Qualified Used Clean Vehicles" link and list of qualified vehicles.

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The sale qualifies only if:

• You buy the vehicle from a dealer

• For qualified used EVs, the dealer reports required information to you at the time of sale and to the IRS.

 

A dealer is a person licensed to sell motor vehicles in a state, the District of Columbia, the Commonwealth of Puerto Rico, any other territory or possession of the United States, an Indian tribal government, or any Alaska Native Corporation.

 

Required information includes:

• Dealer's name and taxpayer ID number

• Buyer's name and taxpayer ID number

• Sale date and sale price

• Maximum credit allowable under IRC 25E

• Vehicle identification number (VIN), unless the vehicle is not assigned one

• Battery capacity

 

How to Claim the Used Clean Vehicle Credit:
Complete Form 8936, Qualified Plug-in Electric Drive Motor Vehicle Credit (Including Qualified Two-Wheeled Plug-in Electric Vehicles and New Clean Vehicles), and file it with your tax return for the year you took possession of the vehicle to claim the used clean vehicle credit. You will need to include the vehicle identification number (VIN) on the form.

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Commercial Clean Vehicle Credit

Businesses and tax-exempt organizations that buy a qualified commercial clean vehicle may qualify for a clean vehicle tax credit of up to $40,000 under Internal Revenue Code (IRC) 45W.  The credit equals the lesser of:

• 15% of your basis in the vehicle (30% if the vehicle is not powered by gas or diesel)

• The incremental cost of the vehicle

 

The maximum credit is $7,500 for qualified vehicles with gross vehicle weight ratings (GVWRs) of under 14,000 pounds and $40,000 for all other vehicles.

Who Qualifies

• Businesses and tax-exempt organizations qualify for the credit. 

• There is no limit on the number of credits your business can claim. For businesses, the credits are nonrefundable, so you can't get back more on the credit than you owe in taxes. A 45W credit can be carried over as a general business credit.

Vehicles That Qualify
To qualify, a vehicle must be subject to a depreciation allowance, with an exception for vehicles placed in service by a tax-exempt organization and not subject to a lease.

The vehicle must also: 

• Be made by a qualified manufacturer as defined in IRC 30D(d)(1)(C). See our index of qualified manufacturers

• Be for use in your business, not for resale

• Be for use primarily in the United States

• Not have been allowed a credit under sections 30D or 45W

In addition, the vehicle must either be:

• Treated as a motor vehicle for purposes of title II of the Clean Air Act and manufactured primarily for use on public roads (not including a vehicle operated exclusively on a rail or rails); or

• Mobile machinery as defined in IRC 4053(8) (including vehicles that are not designed to perform a function of transporting a load over a public highway)

The vehicle or machinery must also either be:

• A plug-in electric vehicle that draws significant propulsion from an electric motor with a battery capacity of at least:

  • 7 kilowatt hours if the gross vehicle weight rating (GVWR) is under 14,000 pounds

  • 15 kilowatt hours if the GVWR is 14,000 pounds or more; or

• A fuel cell motor vehicle that satisfies the requirements of IRC 30B(b)(3)(A) and (B).

How to Claim the Credit
We’re finalizing a form for you to claim the credit. Please check back for updates.

You will need to provide your vehicle's VIN along with the amount of the credit.

The depreciable basis of the vehicle is reduced by the amount of the commercial clean vehicle credit you receive.

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Vehicles Purchased Between August 17 and December 31, 2022
Qualifying EVs purchased and delivered between August 17, 2022, and December 31, 2022, are eligible for the tax incentive as described below for vehicles purchased before August 17, 2022, but are limited to vehicles with final assembly in North America. Manufacturer sales caps on vehicles apply. Note that for some manufacturers, the build location may vary based on the specific vehicle, trim, or the date in the Model Year when it was produced because some models are produced in multiple locations. The build location of a particular vehicle should be confirmed by referring to its Vehicle Identification Number (VIN) using the U.S. Department of Transportation’s VIN decoder or an information label affixed to the vehicle.

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Vehicles Purchased Before August 17, 2022
Qualifying EVs purchased before August 17, 2022, are eligible for a tax credit that is available for the purchase of a new qualified EV that draws propulsion using a traction battery that has at least five kilowatt-hours (kWh) of capacity, uses an external source of energy to recharge the battery, has a gross vehicle weight rating of up to 14,000 pounds, and meets specified emission standards. The minimum credit amount is $2,500, and the credit may be up to $7,500 based on each vehicle’s traction battery capacity and the gross vehicle weight rating. The credit will begin to be phased out for each manufacturer in the second quarter following the calendar quarter in which a minimum of 200,000 qualified PEVs have been sold by that manufacturer for use in the United States. This tax credit is also available for future EV owners with a written binding contract to purchase a new qualifying electric vehicle before August 16, 2022, but do not take possession of the vehicle until on or after August 16, 2022. For more information, including qualifying vehicles and sales by manufacturer, see the Internal Revenue Service (IRS) Qualified Plug-in Electric Drive Motor Vehicle Credit website.

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Under IRC § 30D(a), qualifying plug-in electric drive motor vehicles (EV) purchased before August 17, 2022, are eligible for a tax credit that is available for the purchase of a new qualified EV (i.e., plug-in electric vehicle or light truck) that draws propulsion using a traction battery that has at least five kilowatt-hours (kWh) of capacity, uses an external source of energy to recharge the battery, has a gross vehicle weight rating of up to 14,000 pounds, and meets specified emission standards.

 

The minimum credit amount is $2,500, and the credit may be up to $7,500 based on each vehicle’s traction battery capacity and the gross vehicle weight rating. For vehicles acquired after December 31, 2009, the credit is equal to $2,500 plus, for a vehicle which draws propulsion energy from a battery with at least 5 kilowatt hours of capacity, $417, plus an additional $417 for each kilowatt hour of battery capacity in excess of 5 kilowatt hours.

 

The credit will begin to be phased out for each manufacturer in the second quarter following the calendar quarter in which a minimum of 200,000 qualified PEVs have been sold by that manufacturer for use in the United States.

 

This tax credit is also available for future EV owners with a written binding contract to purchase a new qualifying electric vehicle before August 16, 2022, but do not take possession of the vehicle until on or after August 16, 2022. For more information, including qualifying vehicles and sales by manufacturer, see the Internal Revenue Service (IRS) Qualified Plug-in Electric Drive Motor Vehicle Credit website.

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You may also be eligible for a credit under IRC § 30D(g), if you purchased a 2-wheeled vehicle that draws energy from a battery with at least 2.5 kilowatt hours and may be recharged from an external source. The IRC § 30D(g) credit is effective for vehicles placed in service before January 1, 2024, before being struck by the IRA (see Pub. L. 117-169, Sec. 13401(g)(1) transition rule). The

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Sec. 30D(g), below, as added by Pub. L. 117-169, Sec. 13401(g)(1), is effective for vehicles placed in service after December 31, 2023. See Pub. L. 117-169, Sec. 13401(l), transition rule.

In general, the vehicles must be acquired for use or lease and not for resale. Additionally, the original use of the vehicle must commence with the taxpayer and the vehicle must be used predominantly in the United States and in compliance with specific Air Quality And Motor Vehicle Safety Standards​ as provided in I.R.C. § 30D(f)(7). For purposes of IRC § 30D credit, a vehicle is generally not considered acquired prior to the time when title to the vehicle passes to the taxpayer under state law.