On December 29, 2022, the Internal Revenue Service (IRS) announced that an amendment had been made to the Clean Vehicle Credit that was established in August of 2022. These updates clarify the qualifications and requirements that clean vehicle owners need to meet if they want to take advantage of this tax credit. To save you time, we’ve put together this nifty little blog with an overview about what changes were made and also included resources from the IRS for additional information.
Vehicles purchased between 8/17/2022 – 12/31/2022
New vehicles purchased from 1/1/2023 onward
Previously owned vehicles purchased from 1/1/2023 onward
We know that change can sometimes be scary, but as long as we keep informed, it doesn’t have to be! Keep reading to learn more about the items listed above with asterisks at the end of them. Again, we’ve included resources straight to the IRS websites for your convenience.
* Income Limitations
Income limitations are based on Adjusted Gross Income (AGI). The easiest way to find your AGI is to take line 11 on Form 1040 and ADD
Adjusted Gross Income Limits New Clean Vehicles
Adjusted Gross Income Limits Previously Owned Clean Vehicles
For previously owned clean vehicles, you can use modified AGI from the previous year or the year before you accepted the delivery of your vehicle (whichever is less). If the income is below the threshold for 1 of the 2 years, you can proceed to claim the credit.
**7 Kilowatt Hour Battery Requirement
The requirement for battery power has been raised for vehicles purchased after 12/31/2022. This new qualification currently helps those who own an EV with a 7 kilowatt hour battery, or better, get a minimum base credit of $3,751!
|$2,500||Own an EV||Base credit|
|$417||7 KWh capacity battery||Minimum of 7 kilowatt hour capacity battery|
|$417||Over 5 KWh capacity battery||Additional credit added for every kilowatt over 5 hour capacity|
|$7,500||Own an EV||Credit limit|
It’s important to remember that these credits are nonrefundable and they cannot be rolled over into future tax years.
***Tax Documents Provided by Dealer
The dealer will provide documentation for your EV at the time of sale. This official document is important because you will need it to apply for the Clean Vehicle Credit. The document will contain the following information:
The IRS plans to make more amendments to the Clean Vehicle Credit in March of 2023. One of the possible changes for the future is that the batteries cannot be sourced from “foreign entities of concern,” like Russia, China, etc. Until that change happens, feel free to use our blog as a helpful reference for the Clean Vehicle Tax Credit! We will save you time from searching the web and keep you informed of future amendments on this credit.
For more information about the New Clean Vehicle Tax Credit, click here.
For additional information about the Used Clean Vehicle Tax Credit, click here.