For vehicles placed in service on or after January 1, 2023, several significant changes to the credit apply:
- Minimum Battery Capacity: The minimum battery capacity requirement is increased to 7 kilowatt hours.
- Qualified Manufacturer Requirement: Vehicles must be manufactured by a qualified manufacturer. A qualified manufacturer is one that has entered into a written agreement with the IRS to file periodic reports with vehicle identification numbers (VINs) and other information for each vehicle they manufacture.
- MSRP Limitations: There are limitations on the manufacturer's suggested retail price (MSRP) for the new clean vehicle based on the type of vehicle:
- Vans, Sport Utility Vehicles (SUVs), and Pickup Trucks: $80,000
- Other vehicles: $55,000
- Income Limits: There are income limits for taxpayers to claim the credit. The credit is not available if the taxpayer's modified adjusted gross income (AGI) exceeds certain thresholds:
- Married filing jointly or a surviving spouse: $300,000
- Head of household: $225,000
- All other taxpayers: $150,000
- VIN Reporting: Taxpayers must report the vehicle identification number (VIN) of the vehicle on their income tax return to claim the credit.
- Seller Reporting Requirements: Sellers must provide reports to the taxpayer and the IRS regarding the sale of the vehicle. This report must include specific information such as the name and taxpayer identification number of the seller and buyer, the VIN, the battery capacity, the date of sale, the sale price, and the maximum credit allowable.
These changes are designed to ensure that the vehicles meet specific criteria and that the credit is claimed appropriately by eligible taxpayers.
Sources:
Notice 2023-9
Instructions for Form 8936 (2023)
Rev. Proc. 2023-33
Rev. Proc. 2023-38
FS-2023-8
IRS Proposed Regulations REG-113064-23
Rev. Proc. 2024-26
