If you bought a new, qualified plug-in electric vehicle (EV) or fuel cell vehicle (FCV) in 2023 or after, you may be eligible for a clean vehicle tax credit up to $7,500 under Internal Revenue Code Section 30D. The credit is available as long as you meet certain income and usage requirements. Here is what you need to know to claim the electric vehicle credit on your tax return. Check out this government website to see if your car qualifies for any EV credit.
What are the qualifications for the electric vehicle credit?
To qualify for the electric vehicle credit, you must:
- Buy a new, qualified plug-in EV or FCV from a licensed dealer for your own use, not for resale.
- Use the vehicle primarily in the U.S.
- Have a modified adjusted gross income (AGI) below $300,000 for married couples filing jointly, $225,000 for heads of households, or $150,000 for all other filers. You can use your modified AGI from the year you take delivery of the vehicle or the year before, whichever is less.
- Meet the critical mineral and battery component requirements for vehicles placed in service on or after April 18, 2023. These requirements ensure that the vehicle’s battery contains at least 40% of critical minerals by value and at least 50% of battery components by value that are sourced from the U.S. or its allies.
How much is the electric vehicle credit?
The amount of the electric vehicle credit depends on when you placed the vehicle in service (took delivery), regardless of purchase date. For vehicles placed in service January 1 to April 17, 2023, the credit equals:
- $2,500 base amount
- Plus $417 for a vehicle with at least 7 kilowatt hours of battery capacity
- Plus $417 for each kilowatt hour of battery capacity beyond 5 kilowatt hours
- Up to $7,500 total
For vehicles placed in service April 18, 2023 and after, the credit equals:
- $3,750 if the vehicle meets the critical minerals requirement only
- $3,750 if the vehicle meets the battery components requirement only
- $7,500 if the vehicle meets both
A vehicle that doesn’t meet either requirement will not be eligible for a credit.
How to claim the electric vehicle credit?
To claim the electric vehicle credit, you need to:
- Fill out Form 8936, Qualified Plug-in Electric Drive Motor Vehicle Credit, and attach it to your federal tax return.
- Enter the amount of the credit on Schedule 3, line 7, of Form 1040 or 1040-SR.
- Keep the following documents for your records:
- A copy of the vehicle’s purchase agreement or lease contract
- A copy of the vehicle’s certification letter from the manufacturer or seller
- A copy of the vehicle’s registration or title
Moontree Tax Service can prepare tax returns to take the electric vehicle credit. All you need to do is provide the documents listed above.
