** The following article includes the latest information provided by the Internal Revenue Service. Visit the Clean Vehicle Tax Credit page for more information on this program. This article is organized for information purposes only, and should not be misconstrued as tax, financial, or legal advice.
As we move towards a greener future, the automotive landscape is constantly evolving. The latest evolution? A clean vehicle tax credit offered directly at point of purchase. This means that you can reduce the purchase price of your vehicle by the amount of the tax credit that you qualify for. These significant financial incentives are designed to make electric vehicles (EVs), plug-in hybrids, and fuel cell vehicles (FCVs) more affordable and accessible than ever before. At Jeff Belzer’s, we are committed to giving our consumers the healthy, relevant information they need to make the best decision for them. Today, we will talk about what the clean vehicle tax credit is, how you qualify, and how much you can receive.
What is the Clean Vehicle Tax Credit?
The Clean Vehicle Tax Credit is a federal financial incentive to purchase an electric vehicle (EV), plug-in hybrid, or fuel cell vehicle (FCV). This is an effort to make clean vehicles more affordable to consumers, and thus furthering our goals of a greener future. On April 18, 2023, new rules regarding this tax credit took effect, which will be broken down below. January 1, 2024 is when the truly exciting change happened. Before this day, buyers had to fill out and file Form 8936 with their tax return to get the credit. As of the first of the year, you can transfer the credit to the dealership at the time of sale. Then, the dealer can take that amount off the purchase price, saving you thousands of dollars on your new clean vehicle purchase. There is a credit available for both new and used vehicle purchases. Let’s talk about how you qualify.
How Do I Qualify?
To qualify for this tax credit, you must purchase the vehicle for your own personal use and operate the vehicle primarily in the United States. You can claim it as an individual or a business. The main criteria on the individual level is income. The thresholds vary depending on if you are purchasing a new or used vehicle.
New Vehicles
To qualify, your modified adjusted gross income must not exceed:
- $300,000 for married couples filing jointly
- $225,000 for heads of households
- $150,000 for all other filers
Used Vehicles
When purchasing a qualifying used vehicle, you cannot be the original owner and cannot have claimed another used vehicle credit in the 3 years before the purchase date.
To qualify, your modified adjusted gross income must not exceed:
- $115,000 for married couples filing jointly
- $112,500 for heads of households
- $75,000 for all other filers
You can either use your modified adjusted gross income from the year you took delivery of the vehicle or the year prior, whichever is less. Note that it is when you took delivery of the vehicle, not when you purchased the vehicle. Although these are often the same date, be mindful of this variance.
What Vehicles Qualify?
The qualifications differ slightly between new and used vehicles. Let’s start with new:
New Vehicles
- Have a battery capacity of at least 7 kilowatt hours
- Have a gross vehicle weight rating of less than 14,000 pounds
- Have an MSRP that does not exceed
- $80,000 for vans, SUVs, and pickup trucks
- $55,000 for other vehicles
- Be made by a qualified manufacturer
- FCVs do not need to be made by a qualified manufacturer to be eligible. See Rev. Proc. 2022-42 for more detailed guidance.
- Meet critical mineral and battery component requirements
- Undergo final assembly in North America
- 1. Find this and other information on the vehicle’s window sticker
- 2. Use the Department of Energy’s Electric Vehicles with Final Assembly in North America page and enter in your vehicle’s VIN number
Fuel Economy has created a great resource to determine if your new vehicle qualifies for a tax credit. Go to their new vehicle tax credit page and input the delivery date, year, make, model, and fuel type to determine if your vehicle or a vehicle you are interested in qualifies for a tax credit.
Used Vehicles
- Be an eligible FCA or plug-in EV with a battery capacity of at least 7 kilowatt hours
- Have a gross vehicle weight rating of less than 14,000 pounds
- Have a sale price of $25,000 or less
- This does not include fees required by law, such as tax, title, and registration fees
- Be a model year at least 2 years older than the calendar year that you purchased
- Ex: A vehicle purchased in 2024 must be a model year of 2022 or older
Similar to the new vehicles, Fuel Economy can tell you if your used vehicle qualifies for the credit. Visit their pre-owned vehicle tax credit page for more information.
Of course, if you ever have questions on whether your vehicle or one you are interested in qualifies for a tax credit, contact our highly trained and experienced sales team. We will help you every step of the way, from exploring your EV options to getting your tax credit at time of sale.
How Much is the Credit?
New Vehicles
Earlier in the article, we mentioned that new vehicles must meet critical mineral and battery component requirements to qualify. Based on those aspects, here are the tax credit amounts:
- $3,750 if the vehicle meets the critical minerals requirement only
- $3,750 if the vehicle meets the battery components requirement only
- $7,500 if the vehicle meets both
- $0 if the vehicle meets neither requirement
Reference the table below for quick reference on how much a new vehicle qualifies for based on the above requirements. Note that you must also meet the individual requirements to qualify for this credit.
| Model Year | Make | Model | Vehicle Type | Credit Amount | MSRP Limit |
| 2022-2023 | Chevrolet | Bolt EUV | EV | $7,500 | $55,000 |
| 2022-2023 | Chevrolet | Bolt EV | EV | $7,500 | $55,000 |
| 2022-2024 | Chrysler | Pacifica PHEV | PHEV | $7,500 | $80,000 |
| 2022-2024 | Ford | Escape Plug-in Hybrid | PHEV | $3,750 | $80,000 |
| 2022-2024 | Ford | F-150 Lightning (Extended Range Battery) | EV | $7,500 | $80,000 |
| 2022-2024 | Ford | F-150 Lightning (Standard Range Battery) | EV | $7,500 | $80,000 |
| 2022-2024 | Jeep | Grand Cherokee PHEV 4xe | PHEV | $3,750 | $80,000 |
| 2022-2024 | Jeep | Wrangler PHEV 4xe | PHEV | $3,750 | $80,000 |
Used Vehicles
The tax credit on a qualifying pre-owned vehicle equals 30% of the sale price with a maximum of $4,000.
How Do I Claim the Credit?
As of January 1, 2024, tax credit eligibility and the amount of the credit will be determined at the point of sale using the IRS Energy Credits Online portal. Dealers must be registered with the IRS to offer this service to their guests. When you are at the dealership, the dealer will submit the time-of-sale report online, and it will be accepted or rejected in real time. This will determine the credit. The dealer is required to provide a copy of this report to you, which you will need to claim your credit.
To actually claim this credit, there are 2 options.
- Complete the same process that was followed before 2024. Complete and file Form 8936, Qualified Plug-in Electric Drive Motor Vehicle Credit (Including Qualified Two-Wheeled Plug-in Electric Vehicles), with your tax return.
- You can transfer the eligible credit to the dealer. They will apply the credit to the final purchase price so that you receive the benefit of the credit at the time of sale. You still need to fill out Form 8936 and file it with your tax return with your decision to transfer your credit to the dealer. The dealer will then be reimbursed by the IRS.*
*It is important to note that if the vehicle qualifies but you do not qualify for any reason, you must reimburse the IRS for any difference in the credit that you are not eligible for and the benefit you received from the dealer. The dealer is required to provide the modified adjusted gross income requirements for your information but is not required to verify the eligibility of the buyer at the time of sale. It is the responsibility of the buyer to ensure that you qualify.
This federal Clean Vehicle Tax Credit hopes to make electric and hybrid vehicles more accessible to consumers by offering a significant incentive directly at the time of sale. At Jeff Belzer’s, we are here to help you navigate the world of EV and hybrids, providing expert guidance, a wide range of options, and exceptional customer service. Through our 3 locations of Lakeville, New Prague, and Roseville, we offer a variety of makes, including Chevrolet, Ford, Kia, Chrysler, Dodge, Jeep, and Ram. We are also prepared and poised to give you your tax credit right at the dealership. This new change is exciting and we cannot wait to help you along your green vehicle buying journey.
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