The clean vehicle tax credit is designed to encourage you to purchase an electric vehicle (EV), a plug-in hybrid, or a h𒐪ydrogen-powered car. The program offers up to $7,500 for certain new vehicles and up to $4,000 for some used ones and aims to reduce emissions and promote the adoption of cleaner energy. 

Eligibility depends on specific criteria with income limits, vehicle assembly standards, and battery component requirements. Understanding these qualifications and the changes introduced by the 澳洲幸运5官方开奖结果体彩网:Inflation Reduction Act is crucial if 🐈you're considering a clean vehicle purchase.

How Does the Clean Vehicle Tax Credit Work?

To qualify for th♑e credit, you must meet the income requirements and buy a🧸 vehicle that meets the price, battery, and assembly restrictions.

You can 澳洲幸运5官方开奖结果体彩网:use the tax credit in two ways. You ꦯcan claim it on y🌳our tax return, reducing your tax bill by either $7,500 for an eligible new vehicle or $4,000 for an eligible used vehicle.

Your other option is to transfer your clean vehicle credit directly to a car dealer, lowering your vehicle's purchase price at the point of sale. This option went into effect on Jan. 1, 2024, and serves as a discount by allowing you to immediately claim the credit rather than waiting to claim it on your tax return.

How to Qualify for the Tax Credit

You must meet certain income and vehicle requirements to qualify for the clean vehicle tax credit.

Income Restrictions

The credit isn't open to those whose annual 澳洲幸运5官方开奖结果体彩网:taxable income surpasses certain thresholds:

• Single filers: $150,000
• Joint filers: $300,000
• Heads of household: $225,000

Vehicle Requirements

The vehicle must have been assembled and its battery must have been built in North America according to yearly guidelines. At least 60% of a clean vehicle's battery components must be manufactured or assembled in North America in 2025. That figure rises to 100% by 2029.

You can check the U.S. Department of Energy’s Alternative Fuels Data Center (AFDC) that likely meet the requirements to determine whether a vehicle was assembled in North America. You can also enter the 17-character vehဣicle identification number (VIN) into the National Highway Traffic Safety Administration’s .

Price Requirements

The maximum price for qualifying cars is $55,000, according to Kelley Blue Book. It's $80,000 for qualifying trucks, SUVs, and vans.

How to Know If a Vehicle Qualifies

The Department of Energy keeps an updated on its website. As of January 2025, they include Acura ZDX, Chevrolet Blazer EV, Honda Prolog🎐ue, Ford F-150 Lightning, and Kia EV6, among others.

Eligible Tesla models include the Cybertruck Single Motor, Model 3 Performance, Model X All-Wheel Drive, Model Y Performance, and more.

How to Claim the Tax Credit

Credit eligibility is determined at the point of sale. Dealers are responsible for submitting a time-of-sale report to the 澳洲幸运5官方开奖结果体彩网:Internal Revenue Service (IRS) which will then either accept or reject the report in real time. Dealers must provide you with a copy of the report. You’ll need it to claim the credit.

You can either claim the credit on your tax return using 澳洲幸运5官方开奖结果体彩网:Form 8936 or transfer it to the dealer if your vehicle qualifies. The dealer can apply the credit amount directly to your purchase price and later seek reimbursement from the IRS.

Dealers aren't required to verify your eligibility but must provide information about the income thresholds. You’ll have to reimburse the IRS for any improper benefit if you’re not eligible due to factors such as exceeding the income limits. It’s your responsibility to ensure you meet all requirements before claiming or transferring the credit.

Changes Under the Inflation Reduction Act

The U.S. Energy Policy Act of 2005 established a federal income tax credit for the purchase of new hybrid vehicles and several acts have since expanded it. The Inflation Reduction Act implemented some of the most robust changes when it was signed into law by former President Joe Biden in 2022.

Cap on Manufacturers

A cap once prevented each automaker from selling more than 200,000 vehicles in the United States with the clean vehicle tax credit. This made it difficult for consumers to buy vehicles from popular manufacturers such as Tesla and General Motors at a discount. The Inflation Reduction Act removed this cap, however.

Clean Vehicle Definition

The tax credit of $7,500 once applied to a narrow range of vehicles. Those buying a pure EV stood to qualify for the full credit but a buyer of a plug-in hybrid or hydrogen fuel cell car could receive less than half or in some cases nothing. The tax credit has been extended to include other clean vehicles, such as fuel cell vehicles.

Instant Payment vs. End-of-year Tax Credit

Clean vehicle credits can be cashed in at the 澳洲幸运5官方开奖结果体彩网:point of sale. This rule began in 2024. Benefits were only realized on a tax return before this time.

Used Vehicles

The Inflation Reduction Act introduced a tax credit in 2023 for pre-owned clean vehicles that are two or more years old, cost $25,000 or less, weigh less than 14,000 pounds, and are purchased from a dealer. The credit covers up to 30% of the purchase price and is capped at a maximum of $4,000.

The Bottom Line

The clean vehicle tax credit of♉fers up to $7,500 for qualifying new vehicles and up to $4,000 for qualifying uꦍsed vehicles. Eligibility hinges on income limits, vehicle assembly rules, and more.

Confirm that you meet the income requirements and that you've chosen a qualifying vehicle. Then coordinate with the dealer when you're ready to make a purchase. They'll be able to tell you for sure if the vehicle is eligible. You'll be able to use the tax credit right then and there if it is or you can claim it at the end of the tax year when you're filing your tax return if you prefer.