The IRS has issued new information about tax credits for electric vehicles. Now there are four ways you can possibly benefit from a federal tax credit for an electric vehicle that start being serviced in 2023 or later:
- Purchase an electronic vehicle, then claim the clean vehicle credit.
- Lease an electronic vehicle, then benefit from the lessor’s electronic vehicle discount.
- Buy a used electronic vehicle that is eligible for the used electronic vehicle tax credit.
- Buy an electronic vehicle for business purposes, then obtain the new commercial clean vehicle tax credit.
The new clean vehicle credit is available through 2032, and has a maximum credit of $7,500.
To be eligible for the clean vehicle credit, you must meet certain qualifications, including income limitations, vehicle price caps, and domestic assembly requirements. The credit amount for vehicles delivered on or after April 18, 2023, will depend on the specific vehicle meeting critical minerals sourcing and/or battery components sourcing requirements.
If you can’t find an electronic vehicle that meets the credit criteria or if your income is too large, you may lease an electronic vehicle from a leasing company that can claim up to a $7,500 commercial clean vehicle tax credit. The leasing company may then give the entire or a partial amount of the credit to you through reduced leasing costs.
When purchasing a used electronic vehicle, you can earn a credit of up to $4,000; however, you must buy the vehicle from a dealer and meet the law’s lower-income caps and other restrictions.
Finally, if you purchase an electronic vehicle for business purposes, you may qualify for the commercial clean vehicle tax credit. This credit is not subject to critical minerals or battery components rules, which makes it easier to qualify for this credit starting on April 18, 2023.
In order to claim an electronic vehicle credit, the seller of the vehicle needs to complete a seller’s report and provide a copy to the buyer and the IRS. To submit for the clean vehicle credit, buyers will file IRS Form 8936; for the commercial clean vehicle credit, buyers will file IRS Form 8936-A.
For any questions or assistance navigating these new tax credit opportunities, please make sure to contact us.
Useful IRS links: