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TAX CREDITS FOR NEW AND USED ELECTRIC VEHICLES

All-electric, plug-in hybrid, and fuel cell electric vehicles purchased new in 2023 or after may be eligible for a federal income tax credit of up to $7,500.

All-electric, plug-in hybrid, and fuel cell electric vehicles purchased new in 2023 or after may be eligible for a federal income tax credit of up to $7,500.

The availability of the credit will depend on several factors, including the vehicle's MSRP, when you purchased the vehicle, if it was new or used, its final assembly location, battery component and/or critical minerals sourcing, and your modified adjusted gross income (AGI).

Credits for new clean vehicles purchased in 2023 or after

To qualify, you must:

    • Buy it for your own use, not for resale
    • Use it primarily in the U.S.
    • In addition, your modified adjusted gross income (AGI) may not exceed:
    • $300,000 for married couples filing jointly
    • $225,000 for heads of households
    • $150,000 for all other filers

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
    • Be made by a qualified manufacturer.
    • Undergo final assembly in North America
    • Meet critical mineral and battery component requirements (as of April 18, 2023).

The sale qualifies only if:

    • You buy the vehicle new
    • The seller reports required information to you at the time of sale and to the IRS.
    • In addition, the 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

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.

Visit fueleconomy.gov to see if your vehicle is eligible for vehicle credits.

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 up to $7,500 under Internal Revenue Code Section 30D.

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

To qualify, a vehicle must:

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). The credit equals 30% of the sale price up to a maximum credit of $4,000. Purchases made before 2023 don't qualify.

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

To qualify, a vehicle must meet all of these requirements:

    • Have a sale price of $25,000 or less. Sale price includes all dealer-imposed costs or fees not required by law. It doesn't include costs or fees required by law, such as taxes or title and registration fees.
    • 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
    • How to Claim the Used Clean Vehicle Credit

Ask your Liberty Tax expert to help you file form 8936 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.