As of January 2023 the new clean vehicle credit went into effect. The max credit is $7500.
Here are the rules:
- Modified Adjusted Gross Income (MAGI) cannot exceed these limits in the year you buy the vehicle or the prior year:
- $300k for Joint Filers
- $225k for head of household
- $150k for single filers
- If you have a C Corp, then the AGI limits don’t apply (if you run through the business)
- Passthrough businesses such as S Corp or LLC, the AGI limits apply if owners claim the credit.
- Cap of $80k purchase price on SUV’s and Trucks.
- Mustang Mach-E, Volkswagon ID4 and TeslayModel Y all are considered SUV’s with the $80k cap.
- Cap of $55k purchase price on cars
- Must pass the domestic assembly and components rules (manufacturer should disclose this)
- Used EV’s also have a credit, but MAGI limits above are 1/2 to qualify and big caps on purchase price (very hard to qualify)
- Tax form 8936 must be filed to get the credit
There is also the Commercial Clean Vehicle tax credit for business owners which has the same tax credit but different rules.