IRS New Clean Vehicle Tax Credit

The IRS released a list of vehicles that may be eligible for the new clean vehicle tax credit as a plug-in electric or fuel cell vehicle if purchased by a qualifying taxpayer in 2023. The list includes vehicles produced by 19 manufacturers as well as the limit on the manufacturer’s suggested retail price (MSRP) that applies to each.

According to the IRS, the vehicles that appear on the list do not automatically qualify. The vehicles must also:

  • Have undergone final assembly in North America
  • Not exceed the MSRP of
    • $80,000 for vans, SUVs and pickup trucks
    • $55,000 for other vehicles

To ensure the vehicle was assembled in North America, the IRS recommends using the vehicle identification number (VIN) tool available on the U.S. Department of Energy website to confirm where final assembly occurred.

The IRS also released a fact sheet that includes FAQs addressing issues related to new, previously owned and qualified commercial clean vehicle credits. The credits were included in the Inflation Reduction Act of 2022. Topics addressed by the FAQs include the following:

  • Eligibility rules for the new and pre-owned clean vehicle credits
  • Income and price limitations for the new and pre-owned clean vehicle credits
  • Claiming the pre-owned clean vehicle credit
  • Qualified commercial clean vehicle credit

The U.S. Department of Treasury and the IRS has issued notices stating their intent to publish regulations defining terms for the purposes of the new clean vehicle tax credit and addressing 2023 incremental costs for the new commercial clean vehicle credit.

Notice 2023-1 states that proposed regulations will be issued to define terms for the clean vehicle credit for vehicles placed in service beginning in 2023. Defined terms include:

  • MSRP
  • Vehicle classification categories
  • Final assembly
  • Placed in service

Notice 2023-9 states that the IRS has reviewed the 2023 incremental cost for all street vehicles that are not compact plug-in hybrids and found that, for vehicles with a weight rating of under 14,000 pounds, the incremental cost will be more than $7,500. Therefore, the available credit amount for vehicles of less than 14,000 pounds placed in service during 2023 will not be limited. The IRS will accept the incremental cost published by the Department of Energy. Contact RTW Xxact today for assistance with claiming your Vehicle Tax Credit. Email