Wiktor Wise
The electric vehicle tax credit is a popular incentive for car buyers interested in purchasing an electric vehicle. The credit is worth up to \$7500 for new vehicles and \$4000 for used vehicles, and it can be claimed when filing your tax return. To claim the credit, individuals need to file Form 8936, the Qualified Plug-in Electric Drive Motor Vehicle Credit, with their tax return. This form is used to determine the tax credit value for certain qualified electric vehicles and can be used to claim either the Qualified Plug-In Electric Drive Motor Vehicle Credit or the new Clean Vehicle Credit. The credit is available for vehicles purchased during specific time frames, such as after December 31, 2009, through December 31, 2022, or January 1, 2023, through September 30, 2025. It's important to note that the rules and eligibility criteria for the electric vehicle tax credit may vary, so individuals should review the requirements before claiming the credit.
| Characteristics | Values |
|---|---|
| Form number | 8936 |
| Maximum credit value | USD 7,500 |
| Credit value for used vehicles | USD 4,000 |
| Credit value for home chargers | USD 1,000 |
| Credit value for home energy storage | USD 1,000 |
| Qualifying vehicle purchase period | After December 31, 2009, through December 31, 2022, or January 1, 2023, through September 30, 2025 |
| Modified Adjusted Gross Income (AGI) threshold | $300,000 for married couples filing jointly or a surviving spouse |
| Vehicle manufacturer suggested retail price (MSRP) threshold | $80,000 for vans, sport utility vehicles and pickup trucks |
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What You'll Learn
File Form 8936 with your tax return
If you have purchased a qualifying plug-in electric vehicle (EV) or clean vehicle, you may be eligible for a tax credit of up to $7,500. This credit is available for certain new vehicles placed in service before 2023 or between January 1, 2023, and September 30, 2025. To claim this credit, you must file Form 8936 with your tax return for the year in which you take delivery of the vehicle. This form is used to determine your tax credit value and must be attached to your Form 1040 when you file your tax return.
When filing Form 8936, you will need to provide certain information about your vehicle, including the vehicle identification number (VIN) and the manufacturer's suggested retail price (MSRP). The MSRP threshold for qualifying vehicles is $80,000 for vans, sport utility vehicles, and pickup trucks. In addition, your modified adjusted gross income (AGI) must not exceed $300,000 if you are a married couple filing jointly or a surviving spouse. You can use your modified AGI from the year you take delivery of the vehicle or the previous year, whichever results in a lower threshold.
It is important to note that the tax credit is non-refundable, meaning you cannot get back any credit value in excess of the taxes you owe. Any excess credit value cannot be applied to future tax years. However, if you are claiming the credit as a business, any unused credit value can be carried forward to future years.
If you choose to transfer the credit amount to the dealer at the time of sale, you must still file Form 8936 and Schedule A (Form 8936) with your tax return for the year in which the vehicle was placed in service. Schedule A is used to figure out the credit amount for each vehicle that qualifies for the credit. Additionally, if you are a tax-exempt or governmental entity claiming the qualified commercial clean vehicle credit, you must file Schedule A (Form 8936), Form 3800 (General Business Credit), and Form 990-T (Exempt Organization Business Income Tax Return), in addition to Form 8936.
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Claim the credit on your tax return
If you bought a new, qualified plug-in electric vehicle (EV) in 2022 or before, you may be eligible for a clean vehicle tax credit of up to $7,500. The tax credit is now known as the Clean Vehicle Credit, but it was previously called the Qualified Plug-In Electric Drive Motor Vehicle Credit. The name change occurred due to the Inflation Reduction Act of 2022, which introduced new rules for the credit for vehicles purchased from 2023 to 2032.
To claim the credit on your tax return, you need to file Form 8936, Clean Vehicle Credits, with your tax return. You will need to provide your vehicle's Vehicle Identification Number (VIN). The dealer should give you a paper copy of a time-of-sale report when you complete your purchase. You can claim the credit by filling out Form 8936 and attaching it to your Form 1040 when you file your tax return.
The Clean Vehicle Credit is worth up to $7,500. The credit is not refundable if you are claiming it as an individual, so you won't be able to get back any credit value in excess of the taxes you owe. You also cannot apply any excess credit value to future tax years, meaning you can only claim the full $7,500 value in one year or forfeit the unused balance. However, if you are claiming the credit as a business, any excess credit value not used in the year of acquisition can be carried forward to future years.
If you are purchasing a used electric vehicle, you may be eligible for a federal tax credit of up to $4,000. The vehicle must be acquired and placed in service during your tax year. In addition, your modified Adjusted Gross Income (AGI) may not exceed a certain limit based on your tax filing. You can use your modified AGI from the year you take delivery of the vehicle or the year before, whichever is less. If your modified AGI is below the threshold in one of the two years, you can claim the credit.
It is important to note that the federal EV credit will no longer be available for any vehicles purchased after September 30, 2025.
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Eligibility criteria
The electric vehicle tax credit is a non-refundable credit aimed at lowering the cost of qualifying plug-in electric or other clean vehicles. The eligibility criteria for the tax credit depend on the type of vehicle, the purchase date, and whether the vehicle is for business or personal use.
For vehicles purchased between January 1, 2023, and September 30, 2025, the Clean Vehicle Credit is available for new, qualifying plug-in electric vehicles or fuel cell electric vehicles. The vehicle must be placed in service during the tax year and meet the following criteria:
- Battery storage capacity of 7 kilowatt-hours (kWh) or more.
- Gross vehicle weight of less than 14,000 pounds.
- Produced by a qualified manufacturer (fuel-cell vehicles excluded).
- Undergo final assembly in North America.
- Have 50% or more of the value of the battery components manufactured or assembled in North America.
- Have 40% or more of the minerals contained in its battery mined or processed in countries with which the US has a free trade agreement, or recycled in North America.
The vehicle's manufacturer suggested retail price (MSRP) must also not exceed $80,000 for vans, sport utility vehicles, and pickup trucks.
For vehicles purchased before January 1, 2023, the Qualified Plug-In Electric Drive Motor Vehicle Credit was available. This credit was worth up to $7,500 and had different eligibility criteria, including a limit on the number of electric vehicles a manufacturer could sell.
It is important to note that the tax credit is non-refundable, meaning any excess credit value cannot be applied to future tax years or refunded if it exceeds the taxes owed. Additionally, the seller must report certain information to the IRS for the vehicle to be eligible for the credit.
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Income limits
The electric vehicle (EV) tax credit is available for both new and used vehicles. The credit is up to $7,500 for new vehicles and up to $4,000 for used vehicles purchased before September 30, 2025. However, there are income limits that determine eligibility for the tax credit.
For new clean vehicle purchases in 2023 and beyond, the modified adjusted gross income (MAGI) limit is $300,000 for married couples filing jointly or a surviving spouse, and $225,000 for those filing as the head of a household. If you are single and your MAGI exceeds $150,000, you will not qualify for the EV tax credit. The EV credit income limit is $150,000 for all other filing statuses.
For used clean vehicle purchases, the income limits are lower. The MAGI limit is $150,000 for married couples filing jointly or a surviving spouse, and $112,500 for those filing as the head of a household.
It is important to note that you can use your MAGI from the year you take delivery of the vehicle or the previous year, whichever is less. If your income is below the threshold for either of the two years, you can claim the credit. Additionally, the tax credit is non-refundable, which means it can lower your tax liability but you will not receive any refund for any excess credit.
To claim the EV tax credit, you must file Form 8936 with your federal income tax return. This form is used to determine the tax credit for qualified two- or three-wheeled plugin electric vehicles. You will need to provide the vehicle identification number (VIN) of your electric vehicle to complete the form.
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Vehicle requirements
To qualify for the tax credit, you must purchase a new, qualifying plug-in electric vehicle (EV) or fuel cell vehicle (FCV). Pre-owned vehicles purchased before 2023 do not qualify for this credit, but new vehicles may qualify for other credits. For example, the vehicle must be purchased from a dealer, have a sale price of $25,000 or less, and have a model year two years prior to the current calendar year.
The vehicle's manufacturer suggested retail price (MSRP) must not exceed $80,000 for vans, sport utility vehicles, and pickup trucks. The MSRP includes manufacturer-installed options, accessories, and trim but excludes destination fees. The vehicle must also meet new critical mineral and battery component requirements.
For plug-in electric vehicles, the vehicle must have a battery capacity of at least 7 kilowatt-hours. For fuel cell vehicles, the vehicle must meet the gross vehicle weight rating and battery capacity requirements specified by the manufacturer.
The vehicle must be placed in service before 2023 to qualify for the Qualified Plug-In Electric Drive Motor Vehicle Credit. For the Clean Vehicle Credit, the vehicle must be placed in service between January 1, 2023, and September 30, 2025.
To claim the credit, you will need to file Form 8936, Clean Vehicle Credits with your tax return. You will need to provide your vehicle's VIN, which can be found on the vehicle's window sticker. The dealer should give you a paper copy of a time-of-sale report when you complete your purchase.
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Frequently asked questions
You need to file Form 8936, the Qualified Plug-In Electric Drive Motor Vehicle Credit, when you file your tax return for the year in which you take delivery of the vehicle.
You must file Form 8936 when you file your tax return for the year in which you take delivery of the vehicle.
The Qualified Plug-In Electric Drive Motor Vehicle Credit and the new Clean Vehicle Credit are each worth up to \$7,500.
Yes, your modified adjusted gross income (AGI) may not exceed \$300,000 for married couples filing jointly or a surviving spouse.
Yes, you may be able to claim a tax credit of up to \$4,000 for eligible used electric vehicles.
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