Taxpayers who purchase a new electric or fuel cell vehicle between 2023 and 2032 may be eligible for a nonrefundable New Clean Vehicle Credit of up to $7,500. To claim this credit, taxpayers must complete Form 8936 (Clean Vehicle Credits) and Form 8936, Schedule A (Clean Vehicle Credit Amount) and include them with their federal income tax return. Note that the requirements for this credit can change each year.
2024 Changes to the New Clean Vehicle Credit
To qualify for the full $7,500 credit in 2024, the following conditions must be met. If only one of these requirements is fulfilled, the credit will be $3,750:
- $3,750 for meeting the Battery Critical Minerals Requirement
- 50% of the critical minerals used in the vehicle’s battery must be either extracted or processed in a country with which the U.S. has a free trade agreement or recycled in North America.
- $3,750 for meeting the Battery Components Requirement
- 60% of the vehicle’s battery components must be manufactured or assembled in North America.
Additionally, beginning in 2024, an electric vehicle will not qualify for the credit if any of its battery components were manufactured or assembled by a foreign entity of concern (e.g., China, Russia, or North Korea).
Using the Credit as a Down Payment
Starting in 2024, taxpayers can transfer the New Clean Vehicle Credit to the dealer at the time of purchase and use it as a down payment for the vehicle.
For more details, see IRS Tax Tip 2023-123: Clean Vehicle Credits Can Help Car Buyers Pay Less at the Dealership.
Reminder of Other Provisions for the New Clean Vehicle Credit
Here are additional key provisions for the New Clean Vehicle Credit:
- Income Limits
The credit is only allowed if the taxpayer’s modified AGI for the current or preceding year does not exceed:- $300,000 for Married Filing Jointly
- $225,000 for Head of Household
- $150,000 for all other filing statuses
- Vehicle Price Limits
The credit is allowed for vehicles with a manufacturer’s suggested retail price of:- No more than $80,000 for vans, SUVs, or pickup trucks
- No more than $55,000 for all other vehicles
- Credit Per Vehicle
The credit can be claimed on one vehicle per year. - Eligible Clean Vehicles
Clean vehicles include plug-in electric vehicles with a battery capacity of at least 7 kilowatt-hours and fuel cell vehicles. - Vehicle Eligibility
The qualifying clean vehicle must:- Be new
- Be purchased for the taxpayer’s own use (not for resale)
- Be used primarily in the U.S.
- Have its final assembly in North America
- Weigh less than 14,000 pounds
- VIN Reporting
The taxpayer must report the Vehicle Identification Number (VIN) on their federal income tax return. - Fuel Cell Vehicles
The full $7,500 credit is available for new fuel cell vehicles that meet the requirements under IRC 30B(b)(3). These vehicles must be propelled by power derived from one or more cells that convert chemical energy directly into electricity by combining oxygen with hydrogen fuel stored onboard the vehicle in any form.
For more information, see the Clean Vehicle Tax Credit page on the CrossLink website, or the following articles on the IRS website:
- Credits for New Clean Vehicles Purchased in 2023 or after
- IRS Fact Sheet FS-2024-26 – Updates to frequently asked questions related to New, Previously Owned and Qualified Commercial Clean Vehicle Credits
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