Mallory Vincent, CPA and Colby Ryan •
If you have purchased a new “clean vehicle” after April 18, 2023, you may qualify for a credit of up to $7,500. To qualify for the credit, your Adjusted Gross Income (AGI) must be below certain limits, which are determined by your filing status (the limits are $300,000 for married filing jointly, $225,000 for head of household, and $150,000 for all other filing statuses). 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 can claim the credit.
If you have purchased a new “clean vehicle” after April 18, 2023, you may qualify for a credit of up to $7,500. To qualify for the credit, your Adjusted Gross Income (AGI) must be below certain limits, which are determined by your filing status (the limits are $300,000 for married filing jointly, $225,000 for head of household, and $150,000 for all other filing statuses). 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 can claim the credit.
There are also certain requirements for the vehicle to qualify for the credit:
Visit this link to the U.S. Department of Energy’s website and enter your vehicle’s make, model, and year to see if it qualifies. You can also ask the dealership for the Vehicle Identification Number (VIN) and enter it into U.S. Department of Energy’s VIN lookup tool here. An important thing to note is if you purchase a qualified vehicle, you should expect to receive a “time-of-sale” report from the dealership, which is also sent to IRS, at the time of the sale. Make sure to keep this report as supporting documentation for your tax return.
This is a nonrefundable credit, meaning if you are already receiving a refund you cannot take this credit. The credit cannot be carried forward to the extent it is claimed for personal use; however, the credit may be carried forward to the extent it is claimed for business use. There is also a used clean vehicle credit with different requirements and limits; to learn more, visit here. In summary, if you plan to purchase a qualifying vehicle for a tax credit, please contact your tax professional to maximize the benefit of this potential tax credit on your tax return.
- The vehicle needs to be purchased for your own use, not for resale, and be used primarily in the United States.
- The vehicle must meet the Critical Mineral and the Battery Component requirements. In short, these requirements ensure that a majority of the minerals and components of the battery are extracted, processed, or manufactured in the United States. These requirements determine whether you receive the full or partial credit. To receive the full credit, the vehicle meets both the Critical Mineral and Battery Components requirements; to receive the partial credit ($3,750), the vehicle only has to meet one of the two requirements.
Visit this link to the U.S. Department of Energy’s website and enter your vehicle’s make, model, and year to see if it qualifies. You can also ask the dealership for the Vehicle Identification Number (VIN) and enter it into U.S. Department of Energy’s VIN lookup tool here. An important thing to note is if you purchase a qualified vehicle, you should expect to receive a “time-of-sale” report from the dealership, which is also sent to IRS, at the time of the sale. Make sure to keep this report as supporting documentation for your tax return.
This is a nonrefundable credit, meaning if you are already receiving a refund you cannot take this credit. The credit cannot be carried forward to the extent it is claimed for personal use; however, the credit may be carried forward to the extent it is claimed for business use. There is also a used clean vehicle credit with different requirements and limits; to learn more, visit here. In summary, if you plan to purchase a qualifying vehicle for a tax credit, please contact your tax professional to maximize the benefit of this potential tax credit on your tax return.