What: The Inflation Reduction Act has made significant changes to the Clean Vehicle Credit and added two new credits for used and commercial clean vehicles. Most of the changes are effective starting in 2023, but a few can have an impact on 2022 tax returns. Some others have later effective dates. Many of the new requirements will make it more difficult to qualify for the credits.
Why: The new credits include domestic content requirements that may take time for manufacturers to achieve. Other limitations include vehicle cost limits, purchaser income limits, and a requirement for Vehicle Identification Numbers on tax returns. Additionally, it does allow immediate benefit by transferring the credit to the dealer for a reduction in purchase price.
Beginning on
A transition rule permits certain vehicles to be treated as being placed in service on
A website is available to determine where a particular vehicle was assembled
An increasing percentage of the critical minerals in the battery must come from the US or a country with a Fair Trade Agreement with the US
An increasing percentage of the battery components must come from
The maximum
The Manufacturers Suggested Retail Price cannot exceed
The taxpayers modified adjusted gross income cannot exceed
The taxpayer must include the Vehicle Identification Number on the tax return
The previous limitation of 200,000 vehicles per manufacturer expires after 2022
The taxpayer may make an election to transfer the credit to the dealer after 2023
The new credit for previously-owned vehicles is limited to
The new business credit for commercial clean vehicles is 30% if not gas or diesel, otherwise 15%, and is limited to
The alternative fuel vehicle refueling property credit has been extended for 2022 with significant new requirements imposed starting in 2023
Who: Tax expert
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