Starting in 2023, the Internal Revenue Service (IRS) will offer a tax credit for new electric vehicles (EV) and fuel cell vehicles (FCV). The credit, modified by the Inflation Reduction Act of 2022, is available to both individuals and businesses for vehicles purchased between 2023 and 2032. The credit is worth up to $7,500.
- Who can claim the tax credit?
- What makes a vehicle qualify?
- Claiming the tax credit
- List of qualified vehicles
Who can claim the clean vehicle tax credit?
To qualify for the credit, the vehicle must be used primarily in the United States and not purchased for resale. In addition, the modified adjusted gross income (AGI) of the person or business claiming the credit must not exceed certain thresholds based on their filing status.
For married couples filing jointly, the AGI must not exceed $300,000. For heads of households, the AGI must not exceed $225,000. For all other filers, the AGI must not exceed $150,000.
The AGI can be from the year in which the vehicle was purchased, or the year before, whichever is lower. If the AGI is below the threshold in either of these years, the individual or business may be eligible to claim the credit.
What makes a vehicle qualify for the clean vehicle tax credit?
In order to qualify for the credit, the vehicle must also meet certain requirements. It must have a battery capacity of at least 7 kilowatt hours and a gross vehicle weight rating of less than 14,000 pounds. It must also be made by a qualified manufacturer or undergo final assembly in North America (FCVs are not required to be made by a qualified manufacturer).
The vehicle’s manufacturer suggested retail price (MSRP) must not exceed certain thresholds in order to qualify for the tax credit. Vans, sport utility vehicles, and pickup trucks must have an MSRP of no more than $80,000, while other vehicles must have an MSRP of no more than $55,000.
MSRP is the retail price of the vehicle suggested by the manufacturer and includes options, accessories, and trim, but excludes destination fees. It is important to note that the MSRP is not necessarily the price that the buyer will pay for the vehicle.
Claiming the clean vehicle tax credit
To claim the credit, the person or business must file Form 8936, “Qualified Plug-in Electric Drive Motor Vehicle Credit,” with their tax return and provide the vehicle’s VIN. The seller is also required to report the name and taxpayer identification number of the buyer to the IRS for the buyer to be eligible to claim the credit.
It is also worth noting that credits are also available for used clean vehicles, qualified commercial clean vehicles, and new plug-in EVs purchased before 2023. More information on these credits can be found on the IRS website.
List of qualified vehicles for the clean vehicle tax credit
This list is based on the IRS index of qualified vehicles
| Model Year | Vehicle Description | Applicable MSRP Limit | Manufacturer |
| 2023 | Audi Q5 TFSI e Quattro (PHEV) | $80,000 | Audi of America, LLC |
| 2021, 2022, 2023 | BMW 330e | $55,000 | BMW of North America, LLC |
| 2021, 2022, 2023 | BMW X5 xDrive45e | $80,000 | BMW of North America, LLC |
| 2022, 2023 | Ford Escape Plug-In Hybrid | $80,000 | Ford Motor Company |
| 2022, 2023 | Ford E-Transit | $80,000 | Ford Motor Company |
| 2022, 2023 | Ford F-150 Lightning | $80,000 | Ford Motor Company |
| 2022, 2023 | Ford Mustang Mach-E | $55,000 | Ford Motor Company |
| 2022, 2023 | Lincoln Aviator Grand Touring | $80,000 | Ford Motor Company |
| 2022, 2023 | Lincoln Corsair Grand Touring | $55,000 | Ford Motor Company |
| 2022, 2023 | Chevrolet Bolt | $55,000 | General Motors LLC |
| 2022, 2023 | Chevrolet Bolt EUV | $55,000 | General Motors LLC |
| 2022, 2023 | Cadillac Lyriq | $55,000 | General Motors LLC |
| 2021, 2022, 2023 | Nissan Leaf S | $55,000 | Nissan North America |
| 2021, 2022 | Nissan Leaf S Plus | $55,000 | Nissan North America |
| 2021, 2022 | NIssan Leaf SL Plus | $55,000 | Nissan North America |
| 2021, 2022 | Nissan Leaf SV | $55,000 | Nissan North America |
| 2021, 2022, 2023 | Nissan Leaf SV Plus | $55,000 | Nissan North America |
| 2022, 2023 | Rivian R1S | $80,000 | Rivian Automotive, LLC |
| 2022, 2023 | Rivian R1T | $80,000 | Rivian Automotive, LLC |
| 2022, 2023 | Chrysler Pacifica PHEV | $80,000 | Stellantis N.V. |
| 2022, 2023 | Jeep Wrangler 4xe | $80,000 | Stellantis N.V. |
| 2022, 2023 | Jeep Grand Cherokee 4xe | $80,000 | Stellantis N.V. |
| 2022, 2023 | Tesla Model 3 Rear Wheel Drive | $55,000 | Tesla Inc. |
| 2022, 2023 | Tesla Model 3 Long Range | $55,000 | Tesla Inc. |
| 2022, 2023 | Tesla Model Y All-Wheel Drive – 7 seat variant (3-rows) | $80,000 | Tesla Inc. |
| 2022, 2023 | Tesla Model Y Long Range – 7 seat variant (3-rows) | $80,000 | Tesla Inc. |
| 2022, 2023 | Tesla Model Y Performance – 7 seat variant (3-rows) | $80,000 | Tesla Inc. |
| 2022, 2023 | Tesla Model Y All-Wheel Drive – 5 seat variant (2-rows) | $55,000 | Tesla Inc. |
| 2022, 2023 | Tesla Model Y Long Range – 5 seat variant (2-rows) | $55,000 | Tesla Inc. |
| 2022, 2023 | Tesla Model Y Performance – 5 seat variant (2-rows) | $55,00 | Tesla Inc. |
| 2023 | Volkswagen ID.4 | $55,000 | Volkswagen Group of America |
| 2023 | Volkswagen ID.4 Pro | $55,000 | Volkswagen Group of America |
| 2023 | Volkswagen ID.4 Pro S | $55,000 | Volkswagen Group of America |
| 2023 | Volkswagen ID.4 S | $55,000 | Volkswagen Group of America |
| 2023 | Volkswagen ID.4 AWD Pro | $80,000 | Volkswagen Group of America |
| 2023 | Volkswagen ID.4 AWD Pro S | $80,000 | Volkswagen Group of America |
| 2022 | Volvo S60 (PHEV) | $55,000 | Volvo Car North America, LLC |
| 2022 | Volvo S60 Extended Range | $55,000 | Volvo Car North America, LLC |
| 2023 | Volvo S60 T8 Recharge (Extended Range) | $55,000 | Volvo Car North America, LLC |
