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The U.S. House of Representatives has passed its budget reconciliation bill, dubbed The One, Big, Beautiful Bill. Among other things, the sweeping bill would eliminate clean vehicle credits by the end of 2025 in most\u00a0cases.<\/p>\n
If you\u2019ve been pondering the purchase of a new or used electric vehicle (EV), you\u2019ll want to buy sooner rather than later to take advantage of available tax credits. Here\u2019s what you need to\u00a0know.<\/p>\n
The current credit<\/strong><\/p>\n The Inflation Reduction Act (IRA) significantly expanded the Section\u00a030D credit for qualifying clean vehicles placed in service after April\u00a017, 2023. For eligible taxpayers, it extended the credit to any \u201cclean vehicle,\u201d including EVs, hydrogen fuel cell cars and plug-in hybrids, through 2032. It also created a new credit, Sec.\u00a025E, for eligible taxpayers who buy used clean vehicles from dealers. That credit equals the lesser of $4,000 or 30% of the sale\u00a0price.<\/p>\n The maximum credit for new vehicles is $7,500, based on meeting certain sourcing requirements for 1)\u00a0critical minerals and 2)\u00a0battery components. Clean vehicles that satisfy only one of the two requirements qualify for a $3,750\u00a0credit.<\/p>\n The Sec.\u00a030D and Sec.\u00a025E credits aren\u2019t refundable, meaning you can\u2019t receive a refund if you don\u2019t have any tax liability. In addition, any excess credit can\u2019t be carried forward if it\u2019s claimed as an individual credit. A credit can be carried forward only if it\u2019s claimed as a general business credit.<\/p>\n If you\u2019re eligible for either credit (see below), you have two options for applying it. First, you can transfer the credit to the dealer to reduce the amount you pay for the vehicle (assuming you\u2019re purchasing the vehicle for personal use). You\u2019re limited to making two transfer elections in a tax year. Alternatively, you can claim the credit when you file your tax return for the year you take possession of the vehicle.<\/p>\n Buyer requirements<\/strong><\/p>\n To qualify for the Sec.\u00a030D credit, you must purchase the vehicle for your own use (not resale) and use it primarily in the United States. The credit is also subject to an income limitation. Your modified adjusted gross income (MAGI) can\u2019t exceed:<\/p>\n If your MAGI was less in the preceding tax year than in the year you take delivery of the vehicle, you can apply that amount for purposes of the income\u00a0limit.<\/p>\n Note:<\/strong> As initially drafted, the GOP proposal would retain the Sec.\u00a030D credit through 2026 for vehicles from manufacturers that have sold fewer than 200,000 clean vehicles.<\/p>\n For used vehicles, you similarly must buy the vehicle for your own use, primarily in the United States. You also must\u00a0not:<\/p>\n A MAGI limit applies for the Sec.\u00a025E credit, but with different amounts than those for the Sec.\u00a030D credit:<\/p>\n You can choose to apply your MAGI from the previous tax year if it\u2019s\u00a0lower.<\/p>\n Vehicle requirements<\/strong><\/p>\n You can take advantage of the Sec.\u00a030D credit only if the vehicle you purchase:<\/p>\n In addition, the manufacturer suggested retail price (MSRP) can\u2019t exceed $80,000 for vans, sport utility vehicles and pickup trucks, or $55,000 for other vehicles. The MSRP for this purpose isn\u2019t necessarily the price you paid. It includes manufacturer-installed options, accessories and trim but excludes destination\u00a0fees.<\/p>\n To qualify for the used car credit, the vehicle\u00a0must:<\/p>\n The sale price for a used vehicle is determined after the application of any incentives \u2014 but before the application of any trade-in value.<\/p>\n Don\u2019t forget the paperwork<\/strong><\/p>\n Form\u00a08936, \u201cClean Vehicle Credits,\u201d must be filed with your tax return for the year you take delivery. The form is required regardless of whether you transferred the credit or chose to claim it on your tax return. Contact us if you have questions regarding the clean vehicle tax credits and their availability.<\/p>\n \u00a9 2025<\/em><\/p>\n <\/body> The U.S. House of Representatives has passed its budget reconciliation bill, dubbed The One, Big, Beautiful Bill. Among other things, the sweeping bill would eliminate clean vehicle credits by the end of 2025 in most\u00a0cases. If you\u2019ve been pondering the purchase of a new or used electric vehicle (EV), you\u2019ll want to buy sooner rather […]<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[7,59,10],"tags":[8,11,12],"class_list":["post-17345","post","type-post","status-publish","format-standard","hentry","category-articles","category-etra","category-news","tag-articles","tag-news","tag-updates"],"_links":{"self":[{"href":"https:\/\/www.sfw.cpa\/news-and-guides\/wp-json\/wp\/v2\/posts\/17345","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.sfw.cpa\/news-and-guides\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.sfw.cpa\/news-and-guides\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.sfw.cpa\/news-and-guides\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/www.sfw.cpa\/news-and-guides\/wp-json\/wp\/v2\/comments?post=17345"}],"version-history":[{"count":1,"href":"https:\/\/www.sfw.cpa\/news-and-guides\/wp-json\/wp\/v2\/posts\/17345\/revisions"}],"predecessor-version":[{"id":17346,"href":"https:\/\/www.sfw.cpa\/news-and-guides\/wp-json\/wp\/v2\/posts\/17345\/revisions\/17346"}],"wp:attachment":[{"href":"https:\/\/www.sfw.cpa\/news-and-guides\/wp-json\/wp\/v2\/media?parent=17345"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.sfw.cpa\/news-and-guides\/wp-json\/wp\/v2\/categories?post=17345"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.sfw.cpa\/news-and-guides\/wp-json\/wp\/v2\/tags?post=17345"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}\n
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