Clean Vehicle Credit – Updated August 2023
Key Changes Under the New Law
- The previous 200,000-vehicle cap for manufacturers is eliminated.
- The credit expires for all vehicles placed in service after 2023.
- Final assembly of the vehicle must occur within North America.
Maximum $7,500 Credit Structure for Vehicles Purchased After April 18, 2023
- $3,750 credit applies if the vehicle meets critical minerals requirement.
- $3,750 credit applies if the vehicle meets battery components requirement.
Dealership Reporting Requirements
A car dealership selling a qualified clean vehicle must report the following to both the taxpayer and the IRS:
- Seller’s name & taxpayer ID.
- Buyer’s name & taxpayer ID.
- Vehicle Identification Number (VIN).
- Battery capacity.
- Verification that the taxpayer is the original user.
- Sale date & price.
- Maximum allowable credit for the vehicle.
- Any transfer credit applied (for sales after December 31, 2023).
- Signed declaration under penalty of perjury.
Income Limitations for Credit Eligibility
A taxpayer is NOT eligible for the credit if their modified adjusted gross income (AGI) exceeds:
- $300,000 for Married Filing Jointly.
- $225,000 for Head of Household.
- $150,000 for Single or Married Filing Separately.
Vehicle Price Limits
The credit is NOT allowed if the vehicle’s MSRP exceeds:
- $80,000 for vans, SUVs, pickup trucks.
- $55,000 for all other vehicles.
Tax Credit for Previously-Owned Clean Vehicles
Effective for vehicles acquired after December 31, 2022, the new law introduces IRC Section 25E, allowing a tax credit for pre-owned clean vehicles.
Credit Calculation
The credit equals the lesser of:
- $4,000 or
- 30% of the sale price.
Income Limits for Previously-Owned Vehicle Credit
A taxpayer is NOT eligible for this credit if modified AGI exceeds:
- $150,000 for Married Filing Jointly.
- $112,500 for Head of Household.
- $75,000 for Single or Married Filing Separately.
Eligibility Requirements
- The vehicle must be at least two model years older than the calendar year of purchase.
To check vehicle eligibility, visit:
Fuel Economy Tax Credit Lookup