The Inflation Reduction Act of 2022 made several changes to the tax credits provided for qualified plug-in electric drive motor vehicles, including adding fuel cell vehicles to the tax credit.
Beginning January 1, 2023, eligible vehicles may qualify for a tax credit of up to $7,500. The amount of the credit depends on when the eligible new clean vehicle is placed in service and whether the vehicle meets certain requirements for a full or partial credit.
- The buyer must meet certain income limitations.
- The final assembly of a new clean vehicle must occur within North America.
- The vehicle can’t exceed a manufacturer suggested retail price of:
- $80,000 for vans, sport utility vehicles and pickup trucks
- $55,000 for other vehicles
The purchase of a new clean vehicle between 2009 and 2022 may also qualify for a tax credit.
The IRA also added a credit for used clean vehicles, which can equal 30% percent of the sale price up to a maximum credit of $4,000. However, this recent credit doesn’t apply to used clean vehicles purchased before 2023.
Here’s an updated list of frequently asked questions about new and used clean vehicle credits that covers:
- eligibility rules,
- income and price limitations,
- when the new requirements apply, and
- claiming the credit.
These credits are nonrefundable, so taxpayers can’t get back more on the credit than what they owe in taxes. Plus, the taxpayer can’t apply any excess credit to future tax years.