2023 EV Tax Credits – On or After April 18, 2023
New Clean Vehicle Tax Credit Requirements
New electric vehicles may be eligible for a tax credit of either $7,500 or $3,750 if they are delivered on or after April 18, 2023.
Vehicle Eligibility
Vehicles must meet all of the following requirements:
1. The vehicle you purchase must be listed on this website: https://fueleconomy.gov/feg/tax2023.shtml
2. It must also meet the MSRP limit listed on website.
$80,000 for SUVs, Pickup Trucks and Vans
$55,000 for all other vehicles.
Purchaser Eligibility
You must meet all of these requirements.
1. As the purchaser, you must meet income limits:
$300,000 for joint filers,
$225,000 for head of household, or
$150,000 for single filers
Tip: Only one taxpayer can claim the tax credit, so if you file jointly, and one of you makes less than $150,000 a year, you may consider filing separately so that the taxpayer who earns less can clam the tax credit.
2. You must have tax liability. The tax credit is nonrefundable, so you can’t get more back in the tax credit than you owe the year the vehicle was placed in service.
Other Requirements
These other requirements must be met to receive the clean vehicle tax credit:
Vehicle must be purchased for personal use, not for resale.
Vehicle must be primarily used in the U.S.
Vehicle must be new.
Seller must report required information (your name, tax ID# and VIN) to you at the time of sale and to the IRS.
New EV Tax Credit FAQs
1. How much is the tax credit?
The tax credit is made up of two components. The vehicle is eligible for $3,750 if it meets the critical minerals requirements and $3,750 if it meets the battery components requirement. If it meets both of these requirements, it is eligible for the full $7,500 tax credit. If it meets one of these two requirements, it is eligible for a $3,750 tax credit and if it doesn’t meet either of these requirements, the vehicle would not be eligible for any federal tax credit.
2. What time period does the information on this page cover?
This page covers the time period beginning on April 18, 2023 and onward. The guidance for the new clean vehicle tax credit was released on March 31, 2023. This guidance and the list of eligible vehicles will continue to change, so check back frequently. If you received your car before April 18, 2023, find the correct resource page here.
3. Does this guidance apply to when I ordered the vehicle or when I received it?
The guidance applies to the time period when you receive your vehicle, not when you order it or put a deposit on it. For example, if you ordered your EV in 2022 and you pick it up in May of 2023, you would follow the guidance that applies in May of 2023 when you take delivery of the vehicle.
4. Which year are the income limits for?
Purchaser income limits begin on January 1, 2023 and continue to be a requirement for the New Clean Vehicle Tax Credit (technically known as 30D), as well as the Used Clean Vehicle Tax Credit (technically known as 25E) through the end of 2032. If you purchase a vehicle in 2023, in order to qualify for the tax credit, either your Modified Adjusted Gross Income (MAGI) for that taxable year (2023) or the preceding year (2022) must be below the threshold amount.
5. What if you expect your income to be different in 2023 than 2022?
Assuming you are planning to purchase an EV in 2023, you will qualify based on the Modified Adjusted Gross Income (MAGI) that is the lesser of the two.
An example: You are a single filer and had a MAGI of $145,000 in 2022 but expect to make $155,000 in 2023. The single filer limit is $150,000. Your MAGI for 2022 is the lower of the two years, and that is what you will use to determine if your income qualifies. Since you have a MAGI of $145,000 below the $150,000 threshold, your income qualifies for the tax credit.
6. Are the income limits talking about gross income or something else?
The income limits are based on Modified Adjusted Gross Income. According to the IRS, your modified AGI is the amount from line 11 of your Form 1040 plus:
Any amount on line 45 or line 50 of Form 2555, Foreign Earned Income.
Any amount excluded from gross income because it was received from sources in Puerto Rico or American Samoa.
7. How do I determine if the vehicle I want meets the MSRP cap?
The MSRP is the base retail price suggested by the manufacturer, plus the retail price suggested by the manufacturer for each accessory or item of optional equipment physically attached to the vehicle at the time of delivery to the dealer. It does not include destination charges, optional items added by the dealer, or taxes and fees. The MSRP caps are as follows:
Vans / SUVs / Pickup Trucks – $80,000
Other – $55,000
If the vehicle arrives at the dealer and the MSRP on the sticker is below the cap for that vehicle, it should be eligible for the tax credit as long as the other Clean Vehicle Tax Credit requirements are met.
8. How do I know whether my vehicle will be defined as a truck, van, SUV or other type of vehicle for the purposes of the MSRP cap?
The vehicle’s classification will be displayed on the window sticker of the vehicle as well as online. FuelEconomy.gov’s updated tax credit page pre-screens which vehicles are eligible for the tax credit. Visit the site, select the purchase scenario and it will show you which vehicles are eligible for the credit and how much they are eligible for. It takes the guesswork out of these rather complicated tax credits.
9. What is a Qualified Manufacturer?
A qualified manufacturer is a manufacturer that enters into a written agreement with the IRS. A list of qualified manufacturers is maintained by the IRS and can be found here.
10. Can I get the tax credit by leasing a new clean vehicle?
If you lease a vehicle, the lessor (company that maintains the vehicle title) is the original user. This means that they will claim and receive the tax credit, but they can pass it along to the lessee (you, the customer) in your lease payments. This is done though the commercial clean vehicle tax credit. For more information, see here.
11. Are vehicles made by manufacturers that have sold over 200,000 vehicles eligible for the tax credit in 2023?
They are. As of Jan.1, 2023, the prior sales volume limits no longer apply. This means GM vehicles and Tesla vehicles are eligible for the tax credits if they meet other requirements.
12. If I ordered a vehicle in 2022 and it is delivered in 2023, do the income limits and MSRP limits apply?
Yes, the tax credit guidance is based on when the vehicle is placed in service, so if you take delivery of your vehicle in 2023, the guidance at the time you take delivery of your vehicle will apply.
13. Does the amount of the used EV tax credit depend on whether a vehicle is all-electric or plug-in hybrid electric?
No, both all-electric vehicles and plug-in hybrid electric vehicles are eligible for the tax credit based on whether their batteries meet the critical minerals requirements and the battery component requirements. (For more information, see question #1).
