The U.S. Treasury Department and IRS have announced the procedures that manufacturers and car dealerships must follow so that new and used electric vehicles, including commercial clean vehicles, qualify for tax incentives and credits under the Clean Vehicles Act.
Revenue Procedure 2022-42 released Monday also covers tax law changes added by the Inflation Reduction Act, including the requirement that new electric vehicles made after Aug. 16, 2022, undergo final assembly in North America to be eligible for the tax credit.
Manufacturers must enter into a written agreement with the IRS and provide periodic written reports to the IRS with specific information related to each clean vehicle manufactured. The IRS will not consider a vehicle to meet the requirements unless a qualified manufacturer submits a written report containing the information required.
The U.S. Department of Energy website lists 2022 and 2023 electric vehicles made in North America to help consumers identify vehicles that potentially may be eligible for tax incentives and credits. Final determination on eligibility will be determined by the IRS.
The new IRS document also includes the procedures for people selling vehicles to report specified information to the IRS so the vehicle can be eligible for the tax credit for new or used clean vehicles. The tax credit is 30% of the vehicle’s cost, or $4,000, whichever amount is less.
Tax credits are not allowed for vehicles with a manufacturer’s suggested retail price exceeding $80,000 for a van, sport utility vehicle or pickup truck, or an $55,000 for other types of electric vehicles. To claim the tax credit, taxpayers filing a joint return must have a modified adjusted gross income of $300,000 or less. A taxpayer who files as a head of household cannot have a modified adjusted income exceeding $225,000 and for all other taxpayers the limit is $150,000.
For commercial clean vehicles, the maximum credit per vehicle is $7,500 for vehicles with gross vehicle weight ratings of less than 14,000 pounds, or $40,000 for heavier vehicles.