If you're considering purchasing a clean vehicle or advising clients about clean vehicle tax credits, it’s essential to stay updated on the latest IRS changes. In 2024, the IRS released updated FAQs for the New, Previously Owned, and Qualified Commercial Clean Vehicle Credits, clarifying eligibility, requirements, and benefits.
What Are Clean Vehicle Tax Credits?
The IRS offers tax credits to incentivize the purchase of clean vehicles, which include electric, plug-in hybrid, and hydrogen fuel cell models. These credits aim to reduce carbon emissions and encourage the adoption of sustainable transportation.
There are three main categories of clean vehicle tax credits:
New Clean Vehicle Credit
Previously Owned Clean Vehicle Credit
Qualified Commercial Clean Vehicle Credit
Key Updates for 2024
New Clean Vehicle Credit
The New Clean Vehicle Credit offers up to $7,500 for qualifying vehicles. Recent updates include:
Income Limits: To qualify, your Modified Adjusted Gross Income (MAGI) must not exceed:
$300,000 for married filing jointly
$150,000 for single filers
Vehicle Requirements:
Must meet specific battery capacity and critical mineral sourcing thresholds.
The vehicle’s final assembly must occur in North America.
Pro Tip: Before purchasing, confirm eligibility by checking the IRS's list of qualified vehicles.
Previously Owned Clean Vehicle Credit
This credit, worth up to $4,000, is designed for buyers of used clean vehicles. Updates include:
Eligibility Requirements:
The vehicle must be at least two years old.
The purchase price cannot exceed $25,000.
Income Limits:
$150,000 for married filing jointly
$75,000 for single filers
Did you know? The credit can only be claimed once per vehicle, even if the ownership changes multiple times.
Qualified Commercial Clean Vehicle Credit
For businesses, the Qualified Commercial Clean Vehicle Credit provides incentives to adopt clean fleets. Key updates include:
Credit Amount: The lesser of:
15% of the vehicle’s cost (30% for electric or fuel cell vehicles)
The incremental cost of the clean vehicle compared to a similar traditional vehicle.
No Income Limits: Unlike individual credits, there are no income restrictions for businesses.
How businesses benefit: This credit can significantly reduce fleet upgrade costs, helping businesses meet sustainability goals while lowering taxes.
Commonly Asked Questions Answered
What qualifies as a "clean vehicle"?
Clean vehicles include plug-in electric vehicles (EVs), plug-in hybrid electric vehicles (PHEVs), and hydrogen fuel cell vehicles (HFCVs) that meet specific efficiency and sourcing criteria.
Can I transfer the credit to a dealership?
Are leased vehicles eligible?
How to Claim the Credit
How Arc&Ledger Can Help
Disclaimer
The information provided in this blog post is for general informational purposes only and does not constitute professional tax advice. Tax laws and IRS regulations are subject to change, and while we strive to provide accurate and up-to-date information, we recommend consulting a qualified tax professional or the IRS directly for the most current guidance. Arc&Ledger assumes no responsibility for any errors or omissions in the information provided or for any actions taken based on this blog post.
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