Final IRS Guidance on Clean Vehicle Credits
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Length: approx. 2 min. 10 sec.
Final regulations on new and previously owned clean vehicle credits have been released by the IRS. Specifically detailing the transfer of new and previously owned clean vehicle credits, the latest rules issued by the Internal Revenue Service are relevant to those “eligible to receive advance payments” of transferred credits and those interested in becoming “eligible entities to receive advance payments of the transferred credits”.
Under the Inflation Reduction Act, the maximum clean vehicle credit for a new vehicle is $7,500. This is composed of two separate categories. Half of the credit, or max. $3,750, is based on criteria relating to applicable critical minerals. The remaining $3,750 is based on “certain requirements relating to battery components”.
Meanwhile, previously owned clean vehicles have a maximum credit of $4,000. The vehicle’s sale price must be under $25,000, and it must be placed in service the same tax year. “Previously owned” itself is defined as “the model year of which is at least 2 years earlier than the calendar year in which the taxpayer acquires such vehicle…[and] the original use of which commences with a person other than the taxpayer”.
Modified adjusted gross income limitations, based on filing status, determine if a taxpayer can claim the clean vehicle credit regardless of meeting all other eligibility requirements. For those married filing jointly, or who are surviving spouses, the threshold is $150,000. Heads of households have a threshold of $112,500. All other taxpayers have a threshold of $75,000.
For further details on the final regulations on clean vehicle credits, please refer to the full IRS publication linked in the sources. To fully understand how these regulations can be applied to your unique tax position, reach out to our experienced team at XQ CPA for personalized tax planning. Give us a call to schedule a consultation or book online via the link below. To begin your tax planning journey right away, check out our e-book How to Grow Your Wealth Through Tax Planning, available exclusively in the XQ CPA online store.
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