You may have heard that the newly enacted Inflation Reduction Act includes expanded electric vehicle tax credits.
Although this personal credit has gotten most of the publicity, the new law launched electric vehicle tax credits specifically for business use electric vehicles. And it’s better than the tax credit for personal use electric vehicles.
The new law’s personal use electric vehicle tax credit is now called the Clean Vehicle Credit. It comes with many new restrictions:
- It is available only if your adjusted gross income is no more than $300,000 (married, filing jointly) or $150,000 (single).
- It applies only to electric vehicles with a manufacturer’s suggested retail price below $80,000 for vans, SUVs, and pickup trucks, or $55,000 for other vehicles.
- It must pass complex tax law defined North American assembly and sourcing requirements that prevent many electric vehicles from qualifying.
Luckily, if you purchase or lease an electric vehicle for business use in 2023 or later, the same Clean Vehicle Credit restrictions don’t apply. The tax credit is available for fully electric cars, plug in hybrid electric vehicles, and fuel cell vehicles.
The maximum credit is $7,500 for electric vehicles with a gross vehicle weight rating (GVWR) of less than 14,000 pounds and a whopping $40,000 for electric vehicles with a GVWR of 14,000 pounds or more. In some circumstances, you may have to carry forward a portion or all of your tax credit into future tax years.
Please contact me for help to plan for, claim, and/or defend your electric vehicle tax credit.
Page Updated 10/21/2022