This page was last updated on April 17, 2023.

On April 18, 2023, updates to the Clean Vehicle Tax Credit go into effect.

Important: The guidance on this page is for vehicles delivered on or after April 18, 2023. For guidance on EV tax credits for other time frames, visit Federal EV Tax Credits.

Just a reminder that we offer this information as our best interpretation of the IRS guidance and we do not guarantee what we’ve shared will ensure a consumer will be eligible for any tax benefit. We recommend that you consult a tax advisor or legal counsel, as well as check the IRS website for the most up-to-date information.

Table of Contents

New Clean Vehicle Tax Credit Requirements

New electric vehicles may be eligible for a tax credit of either $7,500 or $3,750 if they are delivered on or after April 18, 2023.

Vehicle Eligibility

Vehicles must meet all of the following requirements:

1. The vehicle you purchase must be listed on this website: https://fueleconomy.gov/feg/tax2023.shtml

2. It must also meet the MSRP limit listed on website.

  • $80,000 for SUVs, Pickup Trucks and Vans
  • $55,000 for all other vehicles.

Purchaser Eligibility

You must meet all of these requirements.

1. As the purchaser, you must meet income limits:

  • $300,000 for joint filers,
  • $225,000 for head of household, or
  • $150,000 for single filers

Tip: Only one taxpayer can claim the tax credit, so if you file jointly, and one of you makes less than $150,000 a year, you may consider filing separately so that the taxpayer who earns less can clam the tax credit.

2. You must have tax liability. The tax credit is nonrefundable, so you can’t get more back in the tax credit than you owe the year the vehicle was placed in service.

Other Requirements

These other requirements must be met to receive the clean vehicle tax credit:

  1. Vehicle must be purchased for personal use, not for resale.
  2. Vehicle must be primarily used in the U.S.
  3. Vehicle must be new.
  4. Seller must report required information (your name, tax ID# and VIN) to you at the time of sale and to the IRS.

EVs That Qualify for the Clean Vehicle Tax Credit

The Department of Energy has created a list of qualifying vehicles with their MSRP caps.

Qualifying Electric Vehicles

New EV Tax Credit FAQs

1. How much is the tax credit?

The tax credit is made up of two components. The vehicle is eligible for $3,750 if it meets the critical minerals requirements and $3,750 if it meets the battery components requirement. If it meets both of these requirements, it is eligible for the full $7,500 tax credit. If it meets one of these two requirements, it is eligible for a $3,750 tax credit and if it doesn’t meet either of these requirements, the vehicle would not be eligible for any federal tax credit.

2. What time period does the information on this page cover?

This page covers the time period beginning on April 18, 2023 and onward. The guidance for the new clean vehicle tax credit was released on March 31, 2023. This guidance and the list of eligible vehicles will continue to change, so check back frequently. If you received your car before April 18, 2023, find the correct resource page here.

3. Does this guidance apply to when I ordered the vehicle or when I received it?

The guidance applies to the time period when you receive your vehicle, not when you order it or put a deposit on it. For example, if you ordered your EV in 2022 and you pick it up in May of 2023, you would follow the guidance that applies in May of 2023 when you take delivery of the vehicle.

4. Which year are the income limits for?

Purchaser income limits begin on January 1, 2023 and continue to be a requirement for the New Clean Vehicle Tax Credit (technically known as 30D), as well as the Used Clean Vehicle Tax Credit (technically known as 25E) through the end of 2032. If you purchase a vehicle in 2023, in order to qualify for the tax credit, either your Modified Adjusted Gross Income (MAGI) for that taxable year (2023) or the preceding year (2022) must be below the threshold amount.

5. What if you expect your income to be different in 2023 than 2022?

Assuming you are planning to purchase an EV in 2023, you will qualify based on the Modified Adjusted Gross Income (MAGI) that is the lesser of the two.

An example: You are a single filer and had a MAGI of $145,000 in 2022 but expect to make $155,000 in 2023. The single filer limit is $150,000. Your MAGI for 2022 is the lower of the two years, and that is what you will use to determine if your income qualifies. Since you have a MAGI of $145,000 below the $150,000 threshold, your income qualifies for the tax credit.

6. Are the income limits talking about gross income or something else?

The income limits are based on Modified Adjusted Gross Income. According to the IRS, your modified AGI is the amount from line 11 of your Form 1040 plus:

  • Any amount on line 45 or line 50 of Form 2555, Foreign Earned Income.
  • Any amount excluded from gross income because it was received from sources in Puerto Rico or American Samoa.

7. How do I determine if the vehicle I want meets the MSRP cap?

The MSRP is the base retail price suggested by the manufacturer, plus the retail price suggested by the manufacturer for each accessory or item of optional equipment physically attached to the vehicle at the time of delivery to the dealer. It does not include destination charges, optional items added by the dealer, or taxes and fees. The MSRP caps are as follows:

  • Vans / SUVs / Pickup Trucks – $80,000
  • Other – $55,000

If the vehicle arrives at the dealer and the MSRP on the sticker is below the cap for that vehicle, it should be eligible for the tax credit as long as the other Clean Vehicle Tax Credit requirements are met.

8. How do I know whether my vehicle will be defined as a truck, van, SUV or other type of vehicle for the purposes of the MSRP cap?

The vehicle’s classification will  be displayed on the window sticker of the vehicle as well as online. FuelEconomy.gov’s updated tax credit page pre-screens which vehicles are eligible for the tax credit. Visit the site, select the purchase scenario and it will show you which vehicles are eligible for the credit and how much they are eligible for.  It takes the guesswork out of these rather complicated tax credits.

9. What is a Qualified Manufacturer?

A qualified manufacturer is a manufacturer that enters into a written agreement with the IRS. A list of qualified manufacturers is maintained by the IRS and can be found here.

10. Can I get the tax credit by leasing a new clean vehicle? 

If you lease a vehicle, the lessor (company that maintains the vehicle title) is the original user. This means that they will claim and receive the tax credit, but they can pass it along to the lessee (you, the customer) in your lease payments. This is done though the commercial clean vehicle tax credit. For more information, see here.

11. Are vehicles made by manufacturers that have sold over 200,000 vehicles eligible for the tax credit in 2023? 

They are. As of Jan.1, 2023, the prior sales volume limits no longer apply. This means GM vehicles and Tesla vehicles are eligible for the tax credits if they meet other requirements.

12. If I ordered a vehicle in 2022 and it is delivered in 2023, do the income limits and MSRP limits apply?

Yes, the tax credit guidance is based on when the vehicle is placed in service, so if you take delivery of your vehicle in 2023, the guidance at the time you take delivery of your vehicle will apply.

13. Does the amount of the used EV tax credit depend on whether a vehicle is all-electric or plug-in hybrid electric?

No, both all-electric vehicles and plug-in hybrid electric vehicles are eligible for the tax credit based on whether their batteries meet the critical minerals requirements and the battery component requirements. (For more information, see question #1).

Used Clean Vehicle Tax Credit Requirements

Pre-owned electric vehicles purchased on or after January 1, 2023 are eligible for a tax credit of 30% of the price of the vehicle up to $4,000.

Vehicle Eligibility

Vehicles must meet all of the following requirements:

1. The vehicle you purchase must be listed on this website:  https://fueleconomy.gov/feg/taxused.shtml

2. The vehicle must have a sale price of $25,000 or less.

3. Vehicle must have a model year at least two years prior to the current calendar year (So for 2023, the vehicle must be MY 2021 or earlier).

4. Must be sold by a dealer.

Purchaser Eligibility

You must meet all of these requirements:

1. As the purchaser, you must meet income limits:

  • $150,000 for joint filers,
  • $112,500 for head of household, or
  • $75,000 for single filers

Tip: Only one taxpayer can claim the tax credit, so if you file jointly, and one of you makes less than $75,000 a year, you may consider filing separately so that the taxpayer who earns less can clam the tax credit. 

2. You must have tax liability, the tax credit is nonrefundable, so you can’t get more back in the tax credit than you owe the year the vehicle was placed in service.

3. A purchaser is eligible for a used EV tax credit once every 3 years.

Other Requirements

These other requirements must be met to receive the clean vehicle tax credit:

  1. Vehicle must be purchased for personal use, not for resale.
  2. You can’t be the original owner of the vehicle.
  3. You can’t be claimed as a dependent on someone else’s tax return.
  4. Vehicle must be primarily used in the U.S.
  5. Each vehicle is only eligible for one tax credit, so once a tax credit is claimed after August 16, 2022 the used vehicle is no longer eligible for the tax credit.
  6. Dealer must report required information to you at the time of sale and to the IRS.
  7. Businesses, non-profits, and fleets cannot receive the used EV tax credit.

Frequently Asked Questions for Used EVs

1. How much is the tax credit?

The previously-owned clean vehicle tax credit can be up to $4,000 or 30% of the vehicle sales price, whichever is less.

2. Can businesses receive the previously-owned clean vehicle tax credit? 

No, only individuals can receive the previously-owned clean vehicle tax credit.

3. Do I have to purchase the vehicle from a dealer?

Yes, to be eligible for the tax credit, the vehicle must be purchased from a dealer.

4. If a vehicle has already received a tax credit when it was purchased as new, is it eligible for the used tax credit? 

Yes. A vehicle is limited to one credit per vehicle for each type of credit meaning that a vehicle can receive the tax credit as a new vehicle and again as a used vehicle for a different owner.

5. Does the vehicle purchase price for the previously-owned clean vehicle tax credit depend on the type of vehicle purchased, such as a van, pickup truck, SUV or other vehicle?

No, all previously-owned clean vehicles are eligible for a tax credit of up to $4,000 or 30% of the vehicle sales price, whichever is less.

6. Does the amount of the used EV tax credit depend on whether a vehicle is all-electric or plug-in hybrid electric?

No, both all-electric vehicles and plug-in hybrid electric vehicles are eligible for the full $4,000.

EV Leases

Leases on new electric vehicles may be eligible for a tax credit of up to $7,500 beginning January 1, 2023.

Vehicle Eligibility

Vehicles must meet all of the following requirements:

1. The vehicle you lease must be made by a qualified manufacturer.

2. The vehicle you lease must be propelled by an electric motor of at least 7kWh and be able to charge from an external source of electricity.

3. The credit amount is the lower of

30% of the sales price for all electric vehicles

or 

15% of the sales price for Plug-In Hybrid Electric Vehicles

or

the incremental cost of the vehicle.

This amount is capped at $7,500–

How This Works

If you are interested in leasing an EV and taking advantage of the tax credit, the company that finances the lease (usually an affiliate of the manufacturer) will access this tax credit. You will need to check with the dealer or manufacturer to make sure this tax credit will be passed on to you in the lease. It could be applied as a down payment on your vehicle, or to buy down the cost of the monthly payments on your lease.

Tip: You may want to make sure that the manufacturer of the vehicle you are interested in leasing is passing the tax credit on to consumers through leases. Check this website to see if the vehicle you lease will access the tax credit. Check often as these are subject to change.

Other Requirements

Vehicle must be new.

Leasing EV Tax Credit Frequently Asked Questions

1. If I am leasing an EV and at the end of my lease I purchase the vehicle from the dealer, will the used vehicle purchase tax credit apply?

We aren’t seeing any guidance that prevents this, but we are still researching this. We have reached out to our federal contacts on this and are waiting for a response. We will be sure to share the answer as soon as we receive additional guidance.

2. What is incremental cost, and will that affect the amount of the tax credit?

The incremental cost is the cost difference between the new clean vehicle and a comparable new gas-powered (ICE) vehicle. The Department of Energy conducted a study that found that all EVs would have an incremental cost of at least $7,500 for 2023. The only exception is compact Plug-In Hybrid Electric Vehicles (PHEVs) which would have the tax credit capped at $7,000. IRS issued a safe harbor notice for 2023 that all EVs have an incremental cost of at least $7,500 except compact PHEVs which have an incremental cost of $7,000.

Pay attention to this number after 2024. As the cost of an EV gets closer to the cost of a comparable gas-powered vehicle, this number will eventually equal zero, meaning the lease won’t be eligible for this tax credit.

Commercial EV Tax Credit

Commercial electric vehicles purchased on or after January 1, 2023 are eligible for a tax credit of up to $7,500 for light duty vehicles and up to $40,000 for vehicles over 14,000 pounds.

Vehicle Eligibility

Vehicles must meet all of the following requirements:

1. The vehicle must be made by a qualified manufacturer.

2. Vehicles under 14,000 pounds must be propelled by an electric motor of at least 7kWh and be able to charge from an external source of electricity.

3. Vehicles over 14,000 pounds must be propelled by an electric motor of at least 15kWh and be able to charge from an external source of electricity.

4. The credit amount is the lower of:

30% of the sales price for all electric vehicles

or 

15% of the sales price for Plug-In Hybrid Electric Vehicles

or

the incremental cost of the vehicle

This amount is capped at:

$7,500 for vehicles under 14,000 pounds and $40,000 for vehicles over 14,000 pounds

Other Requirements

These other requirements must be met to receive the clean vehicle tax credit under 45w of the Clean Vehicle Tax Credit:

  1. Vehicle must be new.
  2. Vehicle must not be acquired for resale.
  3. Each vehicle is only eligible for one tax credit.
  4. Vehicle must be used for business purposes.
  5. Seller must report required information to you and the IRS at the time of sale.

Tip: Not-for-profits and government fleets can take advantage of this tax credit because it is refundable for tax-exempt entities like nonprofits and municipal fleets.

Commercial EV Tax Credit Frequently Asked Questions

1. Can non-taxable entities like non-profits, cities, or government fleets get the commercial tax credit?

Yes, the Commercial Clean Vehicle Tax Credit (also known as 45W) is refundable (or direct pay) for tax-exempt entities like non-profits or government fleets like cities or counties. This means that tax-exempt entities can claim and receive the tax credit even though they don’t pay any taxes. The I.R.S. treats the tax credit as if it was an overpayment of taxes and refunds the money to the tax-exempt entity even though no taxes were paid.

2. What is incremental cost, and will that affect the amount of the tax credit?

The incremental cost is the cost difference between the new clean vehicle and a comparable new gas-powered (ICE) vehicle. The Department of Energy conducted a study that found that all EVs would have an incremental cost of at least $7,500 for 2023. The only exception is compact Plug-In Hybrid Electric Vehicles (PHEVs), which would have the tax credit capped at $7,000. The IRS issued a safe harbor notice for 2023 that all EVs have an incremental cost of at least $7,500 except compact PHEVs, which have an incremental cost of $7,000.

Pay attention to this number after 2024. As the cost of an EV gets closer to the cost of a comparable gas-powered vehicle, this number will eventually equal zero, meaning the lease won’t be eligible for this tax credit.

Disclaimer: The information regarding vehicle eligibility for the Clean Vehicle Tax Credit represents Plug In America’s best understanding of the requirements. This information should not be viewed as a guarantee of eligibility for a tax credit.

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