John had always been passionate about the environment and wanted to do his part in reducing greenhouse gas emissions. He had been researching electric vehicles for a while and finally decided to take the plunge and buy a new plug-in electric vehicle (EV) in 2023.
As he was going through the buying process, John learned about the Clean Vehicle Credit, a tax credit that he could potentially qualify for by purchasing a new, qualified plug-in EV or fuel cell electric vehicle (FCV). The credit could be up to $7,500, which was a significant incentive for John to go ahead with the purchase.
John made sure to double-check the eligibility criteria for the credit, which included having a battery capacity of at least 7 kilowatt hours, a gross vehicle weight rating of less than 14,000 pounds, being made by a qualified manufacturer, and undergoing final assembly in North America. He also ensured that the vehicle’s MSRP did not exceed $55,000, which was the maximum limit for his chosen car model.
As a responsible citizen, John was pleased to know that the credit was subject to modified adjusted gross income limits, which meant that the credit was only available to individuals and businesses with a certain income level. He also made sure that he was buying the vehicle for his own use and not for resale, as that was one of the eligibility criteria for the credit.
After purchasing his new electric vehicle, John was ready to claim the credit on his tax return. He filed Form 8936, Qualified Plug-in Electric Drive Motor Vehicle Credit (Including Qualified Two-Wheeled Plug-in Electric Vehicles) and provided his vehicle’s VIN. He was thrilled to learn that he could potentially receive a credit of up to $7,500 on his tax return.
John was glad that he had made the decision to buy a clean vehicle and was able to benefit from the Clean Vehicle Credit. By switching to an electric vehicle, he was not only reducing his carbon footprint but also contributing to a more sustainable future.
Instruction about Clean Vehicle Credit
In an effort to reduce greenhouse gas emissions and combat climate change, the US government has implemented a Clean Vehicle Credit for new clean vehicles purchased in 2023 or after. This credit is available for individuals and businesses who purchase a new, qualified plug-in electric vehicle (EV) or fuel cell electric vehicle (FCV) and meet certain criteria.
The credit amount can be up to $7,500, which is a nonrefundable credit that can’t exceed the amount of tax you owe. To qualify for the credit, the vehicle must have a battery capacity of at least 7 kilowatt hours and a gross vehicle weight rating of less than 14,000 pounds. The vehicle must also be made by a qualified manufacturer, undergo final assembly in North America, and be bought new with a manufacturer’s suggested retail price (MSRP) that does not exceed $80,000 for vans, sport utility vehicles and pickup trucks, and $55,000 for other vehicles.
The credit is also subject to modified adjusted gross income limits, which is $300,000 for married couples filing jointly, $225,000 for heads of households, and $150,000 for all other filers. If your modified AGI falls below the threshold in one of the two years, you can claim the credit. The seller of the vehicle is also required to report the required information to the buyer and the IRS, including the buyer’s name and taxpayer identification number.
To claim the credit, you need to file Form 8936, Qualified Plug-in Electric Drive Motor Vehicle Credit (Including Qualified Two-Wheeled Plug-in Electric Vehicles) with your tax return and provide your vehicle’s VIN. It’s important to note that this credit is only available for new clean vehicles purchased in 2023 or after, and there are no credits available for used clean vehicles.
This Clean Vehicle Credit is an excellent incentive for individuals and businesses to purchase new, qualified plug-in EVs or FCVs and help reduce their carbon footprint. By switching to clean vehicles, we can take a step towards a more sustainable future and help combat climate change.
Source:IRS