What’s the Deal? Clean Vehicle Tax Credit
The government is giving money back to people who buy eco-friendly cars.
This money back is called by Clean Vehicle Tax Credits.
This is to help our planet by using cars that are better for the environment.
Money Back for New Cars
- If you buy a brand new eco-friendly car, you could get up to $7,500 back.
- But, the car has to be made with special minerals and parts from North America.
- Also, there’s a limit on how much money you can make to get this deal.
Money Back for Used Cars
- If you buy a used eco-friendly car, you could get up to $4,000 back.
- The car must cost $25,000 or less.
- And just like new cars, there’s a limit on how much money you can make to get this deal.
How to Get Your Money: Clean Vehicle Tax Credits
- Make sure the car you buy fits the rules.
- When tax time comes, fill out a special form (Form 8936) to tell the government about your eco-friendly car.
- You might even get the discount right away when you buy the car!
Qualification Conditions
Meet the environmental standards
The vehicle must be new and meet specific environmental standards.
- It must satisfy critical mineral requirements, ensuring a portion of the minerals used in the battery are sourced from secure locations.
- The vehicle must also meet battery component standards, which involve the battery containing a certain percentage of components manufactured or assembled in North America.
Income Limitations
You may not claim the clean vehicle credit if you modified adjusted gross income (AGI) exceeds cerain thersholds.
- For new clean vehicles:
- Married filing jointly or as a qualifying surviving spouse: $300,000
- Head of household: $225,000
- All other taxpayers: $150,000
- For used clean vehicles:
- Married filing jointly or as a qualifying surviving spouse: $150,000
- Head of household: $112,500
- All other taxpayers: $75,000
Your modified AGI is calculated based on the lesser of your modified AGI for the year that the new clean vehicle was placed in service or for the preceding year.
If your filing status changes between the preceding year and the current year, you may claim the New Clean Vehicle Tax Credit if your modified AGI is less than or equal to the threshold applicable to your filing status for the preceding year or current year.
Price Limitations
The manufacturer’s suggested retail price (MSRP) for the clean vehicle must not exceed the following amounts for different vehicle types
- For new clean vehicles:
- Vans: $80,000
- Sport utility vehicles: $80,000
- Pickup trucks: $80,000
- Other vehicle types: $55,000
- For used clean vehicles:
- The sale price must be $25,000
If the MSRP exceeds the limitation for a specific vehicle type, that vehicle is not eligible for the New Clean Vehicle Credit.
How to Claim The Clean Vehicle Tax Credits
- Purchase a qualifying clean vehicle.
- Ensure you meet the income and vehicle requirements.
- When filing your taxes for the year, include Form 8936, which is the Qualified Plug-in Electric Drive Motor Vehicle Credit.
- If eligible, you can transfer the credit to the dealership at the point of sale for an immediate discount on your vehicle purchase.
