Your Guide to Used and Commercial Clean Vehicles

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When diving into federal electric vehicle (EV) tax credits in the U.S., many folks focus on the Clean Vehicle Credit, formerly known as the Qualified Plug-in Electric Drive Motor Vehicle Credit, tailored for new EVs. However, as of 2023, two new players join the game: the Used Clean Vehicle Credit and the Commercial Clean Vehicle Credit. Here’s your lowdown on these fresh clean vehicle tax credits.

First off, a heads-up: these tax credits are exclusively for rides bought on or after Jan. 1, 2023. So, the earliest you can cash in is when filing your 2023 taxes, slated for spring 2024 or later.

Now, let’s zoom in on the specifics of these new federal tax credits for used and commercial EVs.

What’s the Deal with the Used Clean Vehicle Tax Credit? The Used Clean Vehicle Credit makes its debut on your 2023 tax return. Bag a credit for 30% of the purchase price, capped at $4,000. This credit covers qualified used battery electric vehicles (BEVs), plug-in hybrid vehicles (PHEVs), or fuel cell electric vehicles (FCEVs) bought for $25,000 or less from a licensed auto dealer.

Important to note: this credit is nonrefundable. That means it won’t hand you more cash than your tax bill. No rolling over any leftovers to future taxes either.

Qualifying for the Used Clean Vehicle Credit Like its new vehicle counterpart, individual and vehicle qualifications are in play.

Individual qualifications:

  • Buy the used EV for yourself, not for resale.
  • Can’t be the original owner of the EV.
  • Shouldn’t be claimed as a dependent on someone else’s tax return.
  • No claiming another used CVC in the three years before the purchase date.

Income thresholds:

  • $150,000 for married filers, surviving spouses.
  • $112,500 for heads of households.
  • $75,000 for other tax filers.

Vehicle qualifications:

  • Sale price under $25,000.
  • Model year at least two years prior to the purchase year.
  • Not transferred after August 16, 2022.
  • Gross vehicle weight rating under 14,000 lbs.
  • Eligible FCV or plug-in EV with a battery capacity of at least 7 kilowatt-hours.
  • For U.S. driving, sold by a licensed dealer.

Claiming the Used EV Tax Credit To cash in on the federal used EV tax credit, fill out IRS Form 8936. File it with your tax return for the year you nabbed the vehicle, armed with the EV’s vehicle identification number (VIN).

Unveiling the Commercial Clean Vehicle Tax Credit Businesses and tax-exempt organizations, listen up! The Commercial Clean Vehicle Credit is your ticket to savings, ranging from $7,500 to $40,000, depending on the vehicle. It’s the lesser of 30% of the vehicle’s basis or the incremental cost compared to a traditional ICE vehicle.

Qualifying for the Commercial Clean Vehicle Credit For businesses and tax-exempt organizations, there’s no limit to claiming this credit. However, it’s non-refundable, so it won’t exceed your tax bill. You can carry over the credit as a general business credit.

Vehicle qualifications:

  • Made by a qualified manufacturer.
  • For business use, not resale.
  • Primarily used in the USA.
  • Not used to claim any other Clean Vehicle Credit.
  • Either a plug-in EV or fuel cell motor vehicle meeting specific requirements.

Claiming the Commercial EV Tax Credit As of Tax Day 2023, the IRS hasn’t spilled the beans on claiming the Commercial Clean Vehicle Credit. Stay tuned for updates as this credit kicks in for vehicles bought in the 2023 tax year.

2023 is buzzing with excitement for EV enthusiasts! For maximum benefit, chat with a qualified tax preparer before claiming any EV tax credits. And if you’re eyeing charging stations, explore credits or rebates for both commercial and residential EV charging equipment.

The road ahead is electric!

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