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Search Results | 3 laws and incentives
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Federal | Electric Vehicle (EV) and Fuel Cell Electric Vehicle (FCEV) Tax Credit | Incentives |
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Electric Vehicle (EV) and Fuel Cell Electric Vehicle (FCEV) Tax Credit
Type: Incentives |
Jurisdiction: Federal
The Inflation Reduction Act of 2022 (Public Law 117-169) amended the Qualified Plug-in Electric Drive Motor Vehicle Credit (IRC 30D), now known as the Clean Vehicle Credit, and added a new requirement for final assembly in North America that took effect on August 17, 2022, with additional requirements taking place beginning January 1, 2023. For vehicles placed in service on or after January 1, 2023, the Clean Vehicle Credit provisions will be subject to updated guidance from the IRS and the U.S. Department of the Treasury. See the IRS Plug-In Electric Drive Vehicle Credit for further details. More details are provided below by date of purchase and on the list of EVs with Final Assembly in North America.
For up-to-date information on eligibility requirements for the Clean Vehicle Credit for vehicles acquired beginning January 1, 2023, see the information from the IRS.
Vehicles Placed in Service After December 31, 2022Beginning January 1, 2023, the Clean Vehicle Credit (CVC) provisions remove manufacturer sales caps, expand the scope of eligible vehicles to include both EVs and FCEVs, and require a traction battery that has at least seven kilowatt-hours (kWh). An available tax credit under the CVC may be limited by the vehicle’s MSRP and the buyer’s modified adjusted gross income (see below). The CVC provisions also establish criteria for a vehicle to be considered eligible that involve sourcing requirements for critical mineral extraction, processing, and recycling and battery component manufacturing and assembly; these critical material and battery component provisions begin to apply only after the U.S. Department of the Treasury issues guidance on these particular provisions. Until the Treasury Department issues this critical mineral and battery component guidance, the available CVC tax credit amounts to a base amount of $2500 plus, for a vehicle that draws propulsion energy from a battery with at least 7 kWh of capacity, $417, plus an additional $417 for each kilowatt hour of battery capacity in excess of 5 kWh. The total tax credit available for a vehicle may not exceed $7,500. Once the Treasury Department issues the critical mineral and battery component guidance, vehicles that meet the critical mineral requirements are eligible for $3,750 tax credit, and vehicles that meet the battery component requirements are eligible for a $3,750 tax credit. Vehicles meeting both the critical mineral and the battery component requirements are eligible for a total tax credit of $7,500. Critical Minerals: To be eligible for the $3,750 critical minerals portion of the tax credit, the percentage of the value of the battery’s critical minerals that are extracted or processed in the United States or a U.S. free-trade agreement partner or recycled in North America, must increase according to the following schedule:
Battery Components: To be eligible for the $3,750 battery components portion of the tax credit, the percentage of the value of the battery’s components that are manufactured or assembled in North America must increase according to the following schedule:
To be eligible for the CVC tax credit, vans, sport utility vehicles, and pickup trucks must meet the additional requirements of not having a final manufacturer suggested retail price (MSRP) above $80,000, and all other vehicles may not have a final MSRP above $55,000. The final MSRP can be found on the vehicle’s window sticker, which is also known as the “Monroney label”; the final MSRP includes any trim, options, or accessories for the particular vehicle and excludes the destination fee. Additionally, a taxpayer’s eligibility for the tax credit may be limited by thresholds for modified adjusted gross income (MAGI); only individuals having a MAGI below the following thresholds are eligible for the tax credit:
Further guidance on these provisions is forthcoming. For more information, including additional eligibility requirements, see the IRS Plug-In Electric Drive Vehicle Credit website. Vehicles Purchased Between August 17 and December 31, 2022Qualifying EVs purchased and delivered between August 17, 2022, and December 31, 2022, are eligible for the tax incentive as described below for vehicles purchased before August 17, 2022, but are limited to vehicles with final assembly in North America. Manufacturer sales caps on vehicles apply. Note that for some manufacturers, the build location may vary based on the specific vehicle, trim, or the date in the Model Year when it was produced because some models are produced in multiple locations. The build location of a particular vehicle should be confirmed by referring to its Vehicle Identification Number (VIN) using the U.S. Department of Transportation’s VIN decoder or an information label affixed to the vehicle. For more information, see EVs with Final Assembly in North America. Vehicles Purchased Before August 17, 2022Qualifying EVs purchased before August 17, 2022, are eligible for a tax credit that is available for the purchase of a new qualified EV that draws propulsion using a traction battery that has at least five kilowatt-hours (kWh) of capacity, uses an external source of energy to recharge the battery, has a gross vehicle weight rating of up to 14,000 pounds, and meets specified emission standards. The minimum credit amount is $2,500, and the credit may be up to $7,500 based on each vehicle’s traction battery capacity and the gross vehicle weight rating. The credit will begin to be phased out for each manufacturer in the second quarter following the calendar quarter in which a minimum of 200,000 qualified PEVs have been sold by that manufacturer for use in the United States. This tax credit is also available for future EV owners with a written binding contract to purchase a new qualifying electric vehicle before August 16, 2022, but do not take possession of the vehicle until on or after August 16, 2022. For more information, including qualifying vehicles and sales by manufacturer, see the Internal Revenue Service (IRS) Qualified Plug-in Electric Drive Motor Vehicle Credit website. (Reference U.S. Code 30D and Public Law 117-169)
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Federal | Alternative Fuel Infrastructure Tax Credit | Incentives |
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Alternative Fuel Infrastructure Tax Credit
Type: Incentives |
Jurisdiction: Federal
Fueling equipment for natural gas, propane, liquefied hydrogen, electricity, E85, or diesel fuel blends containing a minimum of 20% biodiesel installed through December 31, 2022, is eligible for a tax credit of 30% of the cost, not to exceed $30,000. Permitting and inspection fees are not included in covered expenses. Fueling station owners who install qualified equipment at multiple sites are allowed to use the credit towards each location. Unused credits that qualify as general business tax credits, as defined by the Internal Revenue Service (IRS), may be carried backward one year and carried forward 20 years. For more information about claiming the credit, see IRS Form 8911, which is available on the IRS Forms and Publications website. Beginning January 1, 2023, fueling equipment for natural gas, propane, hydrogen, electricity, E85, or diesel fuel blends containing a minimum of 20% biodiesel, is eligible for a tax credit of 30% of the cost or 6% in the case of property subject to depreciation, not to exceed $100,000. Permitting and inspection fees are not included in covered expenses. Eligible fueling equipment must be installed in locations that meet the following census tract requirements:
Eligible projects must also meet apprenticeships and prevailing wage requirements. Consumers who purchase qualified residential fueling equipment between January 1, 2023, and December 31, 2032, may receive a tax credit of up to $1,000. (Reference 26 U.S. Code 30C, 30D, and 38 and Public Law 117-169)
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Federal | Pre-Owned Electric Vehicle (EV) and Fuel Cell Electric Vehicle (FCEV) Tax Credit | Incentives |
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Pre-Owned Electric Vehicle (EV) and Fuel Cell Electric Vehicle (FCEV) Tax Credit
Type: Incentives |
Jurisdiction: Federal
Beginning January 1, 2023, the Clean Vehicle Credit provides a tax credit of up to $4,000 for the purchase of a pre-owned EV or FCEV. Eligible vehicles must be of a model year at least two years prior to the year of purchase and may not have a purchase price above $25,000. Individuals with a gross annual income below the following thresholds are eligible for the tax credit:
Only one tax credit may be claimed per vehicle. Individuals may not claim more than one pre-owned vehicle tax credit in a three-year period. (Reference Public Law 117-169)
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