Credits for New Electric Vehicles Purchased in 2022 or Before

If a taxpayer purchased a new qualified plug-in electric vehicle in 2022 or before, the taxpayer might be eligible for a clean vehicle tax credit up to $7,500 under IRC Section 30D.

 
There are many requirements for a taxpayer to qualify, not limited to below:

1.     You must buy the vehicle for your own use, not for resale.

2.    You must buy the vehicle for use primarily in the U.S.

3.     There is an no AGI income limit (unlike 2023).

4.    The vehicle must:

5.     Have an external charging source.

6.    Have a gross vehicle weight rating of less than 14,000 lbs.

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

Credits for New Electric Vehicles Purchased after December 31, 2022 

The new Clean Vehicle Credit is in effect after January 1st, 2023, and extends to December of 2032.

There are some changes to rules for Vehicles purchased in 2022 or Before:

1.     There is modification to EV. For instance, the EV Credit only applies to new electric cars with an MSRP of $55,000 or less, and zero-emissions electric SUVs, trucks, or vans with MSRPs of $80,000 or less. 

2.    Used cars can also be now eligible. Rules are different.

3.     Require assembly in North America.

4.    The 200,000 manufacturer's sales cap is eliminated.

5.     Modified adjusted gross income (MAGI) limit of $150,000 for single tax filers, $225,000 for head of household tax filers, and $300,000 for married filing jointly tax filers. If the MAGI exceeds the limit, then the EV credit will not be eligible.

New Tax Credit for Commercial EVs (Section 45W)

Commercial EVs will be eligible for tax credit up to $7,500 for class 1-3 (under 14,000 lbs) and $40,000 for class 4 and above (above 14,000 lbs). The tax credit is nonrefundable. The requirement to qualify section 45W is very similar to 30D, with some exceptions below:



1.     There is no modified adjusted gross income limit.

2.    Do not require assembly in North America

Note that there are other requirements that to pay attention to. There is also no double benefit (taking both Section 30D and Section 45W) or no transfer option for this credit.