How To Claim Tax Credits For A New EV?

To claim the credit for vehicles placed in service before January 1, 2024, file Form 8936, Qualified Plug-in Electric Drive Motor Vehicle Credit (Including Qualified Two-Wheeled Plug-in Electric Vehicles) with your tax return.

Starting January 1, 2024, credit eligibility and amount will be determined at the time of sale using the IRS Energy Credits Online website.

The dealer will complete and submit the time-of-sale report online, and it will be accepted or rejected in real time. The dealer is required to provide you with a copy of the time-of-sale report, and you will need it to claim the credit.

‍Read our article on other homeowner energy tax credits here.

‍

If the vehicle qualifies for a credit, you have two options:

1. You can claim the credit on your tax return for the year in which it was placed in service using Form 8936.
   ‍
2. You can transfer the credit to the dealer so that they can apply the credit amount to your final purchase cost. This essentially allows you to receive the benefit of the credit at the time of sale. The dealer will be reimbursed by IRS. You must still fill out Form 8936 reporting your eligibility for the credit and your decision to transfer the credit to the dealer.
   ‍

Note that if the vehicle qualifies but you do not qualify for the credit for any reason (e.g., your modified adjusted gross income exceeds certain thresholds), you must reimburse IRS for any difference in the credit for which you are eligible and the benefit you received from the dealer.

Dealers are not required to verify the eligibility of the buyer at the time of sale. It is your responsibility to ensure that you meet all buyer requirements.

The dealer is, however, required to provide the modified adjusted gross income requirements for your information.

For more information, see IRS updates frequently asked questions related to new, previously-owned and qualified commercial clean vehicle credits.

‍

Who is eligible to receive EV tax credits?

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
  ‍

You can use your modified AGI from the year you take delivery of the vehicle or the year before, whichever is less. If your modified AGI is below the threshold in one of the two years, you can claim the credit. Your modified AGI is the amount from line 11 of your Form 1040 plus:

• Any amount on line 45 or line 50 of Form 2555, Foreign Earned Income.
  ‍
• Any amount excluded from gross income because it was received from sources in Puerto Rico or American Samoa.
  ‍

The credit is nonrefundable, so you can't get back more on the credit than you owe in taxes. You can't apply any excess credit to future tax years.

‍

Which EV vehicles qualify?

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.
  ‍

Vehicles on this list will meet the above three requirements.

• You buy the vehicle new. New means it hasn't previously been purchased, registered, titled, or used for any purpose.
  ‍
• The seller reports required information to you at the time of sale and to the IRS. Sellers are required to report your name and taxpayer identification number to the IRS for you to be eligible to claim the credit.
  ‍

For vehicles placed in service on or after January 1, 2024, the dealer must be registered with IRS Energy Credits Online, and the vehicle must be approved through Energy Credits Online at the time of sale.

‍

Final Assembly Requirement

The vehicle must undergo final assembly in North America.

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.

To check online if a specific vehicle meets the requirements for final assembly location, go to the Department of Energy's page on Electric Vehicles with Final Assembly in North America and use the VIN Decoder tool under "Specific Assembly Location Based on VIN."

‍

Critical Minerals and Battery Component Requirements

For vehicles placed in service (delivered to the consumer) on or after April 18, 2023, the credit amount will depend on the vehicle meeting the critical minerals sourcing and/or battery components sourcing requirements.

A vehicle meeting both sourcing requirements may be eligible for the full $7,500 credit, and a vehicle meeting only one of these sourcing requirements may be eligible for a credit of $3,750.

A vehicle meeting neither requirement will not be eligible for a credit. In some instances, you may need to check with your dealer regarding the eligibility of and credit amount for a specific vehicle.

‍

MSRP Requirement

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
  ‍

The MSRP is the base retail price suggested by the manufacturer, plus the retail price suggested by the manufacturer for each accessory or item of optional equipment physically attached to the vehicle at the time of delivery to the dealer. It does not include destination charges, the cost of optional items added by the dealer, or taxes and fees. In addition, manufacturer/dealer incentives and trade-ins do not affect MSRP.

These American-made vehicles qualify for the new or used EV tax credits.

‍