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Electric vehicle (EV) tax credits for 2022 and 2023

4 min read

4 min read

Electric vehicles are gaining in popularity – and for a good reason. Not only are they environmentally friendly, but they also have tax benefits. In fact, there is an electric vehicle credit available if you purchase a qualifying electric vehicle (EV) in 2022. 

There’s a good reason to pay attention to changes this year. In fact, the Inflation Reduction Act passed last August changed the existing credit and even added a new credit. (Note: Most of these changes and the new credit will apply for electric vehicles bought after 2022.)

electric vehicle tax credit form

Qualified Electric Vehicle Credit: 2022

In 2022, the available credit you can take is the Qualified Plug-in Electric Vehicle Credit. This non-refundable tax credit is for four-wheeled plug-in electric vehicles that meet particular battery specifications. 

The credit is worth up to $7,500 (depending on battery capacity). But beware… a manufacturing limit applies, so the credit for some vehicles is reduced or unavailable in 2022. Under the new law, cars bought after August 16, 2022, must also meet a “final assembly” requirement. This means that the vehicle’s final assembly must occur in North America. 

Sound like something you qualify for? Claim the credit on IRS Form 8936. 

Clean Vehicle Credit: 2023 to 2032

In 2023, the credit is renamed the Clean Vehicles Credit. There’s also a new Credit for Previously-Owned Clean Vehicles that benefits used electric vehicle buyers beginning in 2023. Read on as we share the details about the cars that qualify for a tax credit.

Who qualifies for the Clean Vehicle Credit?

The Clean Vehicle Credit applies to purchasers of an electric drive motor vehicle meeting certain specifications. It’s worth determining if you qualify, as the credit is worth up to $7,500. The Clean Vehicle Credit can be claimed for vehicles placed in service after December 31, 2022, and doesn’t apply to cars bought after December 31, 2032. The credit is non-refundable, so you won’t get a refund for the unused portion of it. In addition, you can’t carry the credit over to your next year’s return.

To qualify for the Clean Vehicle Credit, you must purchase and place in service a qualified motor vehicle, and the following must be true:

  • You own the vehicle, and you’re the first-time owner.
  • You started using it in the current tax year.
  • Your modified adjusted gross income (MAGI) is equal to or less than $300,000 (Married Filing Jointly and Qualifying Surviving Spouse), $225,000 (Head of Household), or $150,000 for all other filers.
  • The vehicle meets one or both of the following (up to $3,750 each for meeting each part):
    • Critical mineral specifications 
    • Battery components specifications

For a four-wheeled vehicle, your vehicle also must:

  • Have a battery capacity of at least seven-kilowatt hours (for electric vehicles) or be a qualified fuel cell vehicle
  • Meet the North American final assembly requirement (as explained above)
  • Have a manufacturer-suggested retail price (MSRP) of no more than $80,000 for vans, SUVs, and pick-ups, and $55,000 for other vehicles
  • This credit can be transferred to the car dealer starting in 2024

Finally, in 2023 and after, the manufacturer limitations that applied to the old credit will no longer apply to the Clean Vehicle Credit. That means that some vehicles that didn’t qualify for the credit in 2022 because of the per-manufacturer limit may be eligible in 2023 if they meet the critical minerals, battery components, and final assembly requirements.

Credit for Previously-Owned Clean Vehicles starting 2023

Not just new electric vehicles qualify for a tax credit! In fact, there’s a new credit available for previously owned clean vehicles purchased after December 31, 2022, through December 31, 2032, for up to $4,000.

Here are the details of the Credit for Previously-Owned Clean Vehicles:

  • The credit is limited to 30% of the vehicle’s purchase price
  • You can claim the credit once every three years
  • Your modified AGI must be less than $150,000 (Married Filing Jointly and Qualifying Surviving Spouse), $112,500 (Head of Household), or $75,000
  • The vehicle sale price must be $25,000 or less – and the vehicle must be sold by a dealer on the first transfer of the qualifying vehicle
  • A Vehicle Identification Number (VIN) is required to claim the credit; also, the model year must be at least two years earlier than the year the vehicle was sold
  • This credit can be transferred to the car dealer starting in 2024

How do I claim the EV tax credits for 2022 and 2023?

Claiming credits can be complex, which is why we’re here to help! Whether you make an appointment with one of our knowledgeable tax pros or choose one of our online tax filing products, you can count on H&R Block to navigate tax deductions and credits related to electric vehicles.

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