What Is a Qualified Electric Vehicle?

The term qualified electric vehicle refers to a plug-in electric passenger vehicle or light truck that allows the owner to claim a nonrefundable tax credit after purchase. These vehicles must have at least four wheels, be designed for use in the public, and not used for commercial purposes. The vehicle must be powered primarily by an electric motor that draws its charge from rechargeable batteries or fuel cells. The vehicle must be driven almost exclusively in the U.S.

Understanding Qualified Electric Vehicles

As noted above, 澳洲幸运5官方开奖结果体彩网:a qualified electric vehicle is any passenger vehicle or light truck that is designed to be driven by consumers. As such, these vehicles are not intended for commercial use. They must run on batteries or fuel cells that can be recharged using plug-in technology. Consumers with these vehicles are able to claim a nonrefundable 澳洲幸运5官方开奖结果体彩网:tax credit to offset the purchase price.

This credit can be found via Section 30D of the Internal Revenue Code (IRC). The section originated from The Energy Improvement and Extension Act of 2008 and was later modified for vehicles acquired after Dec. 31, 2009, by the 澳洲幸运5官方开奖结果体彩网:Aཧmerican Recovery and Reinvestment Act (ARRA).

Additional amendments were made for specific two- or three-wheeled vehicles acquired between Dec. 31, 2011, and Jan. 1, 2014, by the 澳洲幸运5官方开奖结果体彩网:American Taxpayer🐼 Relief Act (ATRA).

To receive the credit, the vehicles must be acquired for use or lease, and the credit isn't available for resale. The original use of the vehicle must begin with the taxpayer predominantly in the U.S. There are three parts that must be filled out on 澳洲幸运5官方开奖结果体彩网:Form 8936 to get the credit.

Part I calculates the tentative credit amount while the remaining two parts allocate the credit between an individual’s business in Part II and personal use of the vehicle in Part III.

Special Considerations

If the vehicle was purchased after 2023, individuals can receive $2,500 as well as an extra $417 if it is powered by a battery that provides as much as five kilowatt hours of capacity. The owner can also get an additional $417 for every KWh of battery life above the initial five KWh threshold.

If the vehicle was purchased before 2022, individuals can receive $2,917 as well as an extra $417 for each kWh of capacity over 5 kWh.

The Internal Revenue Service (IRS) doesn't phase out the credit for vehicles sold after Jan. 1, 2023, but does for vehicles sold before Jan. 1, 2023. The phase-out limit is certain manufacturers cannot sell more than 200,000 electric vehicles.

For vehicles before 2022, you can find a complete list of makes, models, and credit amounts on the IRS website. Keep in mind, though, that the phase-out period for Ford, General Motors, Tesla, and Toyota vehicles has already been initiated. For vehicles after 2023, there are different requirements and no phase-out.

Effect of the Inflation Reduction Act of 2022

The Inflation Reduction Act of 2022 amended the IRC 30D by adding the new requirement for final assembly in North America which took effect on Aug. 16, 2022. Additional provisions went into effect on Jan. 1, 2023.

The Bottom Line

Consumers looking for sustainable vehicle options can turn to qualified electric vehicles, which provide tax incentives. The tax credits are designed to encourage electric vehicle purchases by reducing costs for consumers. These vehicles, however, must meet certain requirements, such as being rechargeable by batteries or fuel cells and being designed for personal, non-commercial use.