Topic A — Frequently asked questions about the eligibility rules for the New Clean Vehicle Credit under §30D effective Jan. 1, 2023

Updated FAQs were released to the public in Fact Sheet 2024-26 PDF, July 2024.

The Inflation Reduction Act of 2022 (IRA) makes several changes to the tax credit provided in section 30D of the Internal Revenue Code (Code) for qualified plug-in electric drive motor vehicles, including adding fuel cell vehicles to the section 30D tax credit. The IRA also added a new credit for previously owned clean vehicles under section 25E of the Code.

These FAQs provide detail on how the IRA revises the credit available under section 30D (New Clean Vehicle Credit) for individuals and businesses, and information on the credit available under section 25E (Previously Owned Clean Vehicle Credit) for individuals, and the new credit for qualified commercial clean vehicles under section 45W of the Code.

Q1. What is a new clean vehicle for purposes of the New Clean Vehicle Credit? (updated Oct. 6, 2023)

A1. For purposes of the New Clean Vehicle Credit, a new clean vehicle is a clean vehicle placed in service on or after Jan. 1, 2023, that is acquired by a taxpayer for original use. In addition, to qualify for the credit, the vehicle:

• Cannot be acquired for resale;
• Must be manufactured by a qualified manufacturer;
• Must meet the definition of a motor vehicle under Title II of the Clean Air Act (that is, any vehicle manufactured primarily for use on public streets, roads and highways. It must also have at least four wheels);
• Must have a gross vehicle weight rating of less than 14,000 pounds;
• Must be powered to a significant extent by an electric motor with a battery capacity of 7 kilowatt hours or more and must be capable of being recharged from an external source of electricity; and
• Must have final assembly in North America.

To find a list of eligible vehicles visit fueleconomy.gov/newtaxcredit. See Topic A FAQ 2 for additional detail.

Moreover, for a taxpayer to claim the credit, the seller of a new clean vehicle must provide a report containing taxpayer and vehicle information to the taxpayer and to the IRS. See Topic B, FAQs 7-9 for additional detail.

Fuel cell vehicles are also new clean vehicles if (1) the original use begins with the taxpayer, (2) the final assembly is in North America and (3) the seller of the vehicle provides a report to the taxpayer and the IRS.

Q2. Is there a list of vehicles that qualify for the New Clean Vehicle Credit? (updated July 26, 2024)

A2. Yes. The Department of Energy hosts a buyer-friendly version of IRS’s list of potentially eligible clean vehicles, including battery electric, plug-in hybrid, and fuel cell vehicles, that qualified manufacturers have indicated to the IRS meet the requirements to claim the New Clean Vehicle Credit on FuelEconomy.gov. This list is updated as additional vehicle eligibility requirements take effect and as manufacturers provide updated information. That list is available here: FuelEconomy.gov/newtaxcredit. Final confirmation of vehicle qualification should be done in IRS Energy Credits Online at time of purchase. Buyers and sellers may rely on vehicle eligibility information and certifications in IRS Energy Credits Online from the manufacturer, including the manufacturer’s suggested retail price, final assembly, battery attributes, and other vehicle eligibility criteria. The buyer must still meet eligibility requirements, which are described in elsewhere in these FAQs, to claim the credit or to transfer the credit to a dealer. Buyers are advised to receive a copy of the seller report submitted by the dealer to the IRS containing the vehicle identification number being purchased, ensure there are no errors, and then confirm with the dealer that the dealer’s submission of the report through IRS Energy Credits Online was successful. The seller must provide you with a report about a vehicle’s eligibility at the time of sale.

Q3. How can I confirm the final assembly of a new clean vehicle is in North America? (updated March 31, 2023)

A3. There is a Clean Vehicle Credit requirement that vehicles be assembled in North America. The list of eligible vehicles on FuelEconomy.gov includes information about a vehicle's final assembly. The final assembly point will be listed on the vehicle information label attached to each vehicle on a dealer's premises.

North America includes the United States (defined for this purpose to mean the 50 states, the District of Columbia and Puerto Rico), Canada and Mexico for purposes of determining the location of final assembly.

The VIN Decoder website for the National Highway Traffic Safety Administration (NHTSA) also provides final assembly location information.

Q4. How will I know what the vehicle identification number (VIN) is? (updated Oct. 6, 2023)

A4. The vehicle identification number (VIN) is a 17-character number that uniquely identifies a vehicle. It is permanently attached to a vehicle in several locations, appearing on the dashboard for most passenger vehicles and on the label located on the driver's door frame. The VIN is also located on the window sticker of new vehicles and often appears on the vehicle listing on dealers' websites or can be obtained by calling a dealership. Once the VIN is known, the VIN can be used to confirm final assembly. See Topic A FAQ 3.

Q5. If I order a new clean vehicle in one year and don't receive it until a subsequent year, when do I claim the credit? (updated March 31, 2023)

A5. The New Clean Vehicle Credit is claimed in the tax year that the vehicle is placed in service, meaning the tax year that includes the date the taxpayer takes delivery of the vehicle. See also Topic C FAQ 5 and FAQ 8.

Q6. What is the amount of the new clean vehicle credit? (updated March 31, 2023)

A6. Beginning Jan. 1, 2023, eligible vehicles may qualify for a tax credit of up to $7,500. The amount of the credit depends on when the eligible new clean vehicle is placed in service and whether the vehicle meets certain requirements for a full or partial credit.

For vehicles placed in service on or after April 18, 2023, the credit amount will depend on the vehicle meeting the critical minerals requirement ($3,750) and/or the battery components requirement ($3,750). A vehicle meeting neither requirement will not be eligible for a credit; a vehicle meeting only one requirement may be eligible for a $3,750 credit; and a vehicle meeting both requirements may be eligible for the full $7,500 credit.

For vehicles placed in service before or on April 17, 2023, the credit is calculated as a $2,500 base amount plus, for a vehicle which draws propulsion energy from a battery with at least 7 kilowatt hours of capacity, $417, plus an additional $417 for each kilowatt hour of battery capacity in excess of 5 kilowatt hours, up to an additional $5,000 beyond the base amount. In general, the minimum credit amount will be $3,751 ($2,500 + 3 * $417), representing the credit amount for a vehicle with the required minimum of 7 kilowatt hours of battery capacity.

Q7. If the New Clean Vehicle Credit amount is more than my income tax liability for the year, is the credit refundable or able to be carried forward? (updated July 26, 2024)

A7. The amount of the New Clean Vehicle Credit that is more than your income tax liability cannot be refunded, for either personal or business use. However, for purchases after December 31, 2023, eligible taxpayers who purchase an eligible vehicle predominantly for personal use may transfer the entirety of the allowable credit to an eligible entity (a registered dealer) in exchange for a financial benefit and file a federal income tax return with an attached Form 8936 and Schedule A (Form 8936) reporting the transfer of the credit. The entire amount of allowable credit may be transferred even if the credit amount is more than your income tax liability.

If you do not transfer the allowable credit and instead claim it for personal use on, Schedule 3 (Form 1040), Additional Credits and Payments, the New Clean Vehicle Credit is limited to the amount of your income tax liability and cannot be carried forward. For example, your income tax liability is $3,000. You purchased a new clean vehicle for personal use. The amount of tax credit allowed for the New Clean Vehicle Credit is $7,500. You can only claim the allowable $3,000 (the amount of your income tax liability) because, when claimed on Schedule 3, the credit cannot reduce your tax liability below $0. The remaining $4,500 is not refunded, nor can it be carried forward.

For business use, the New Clean Vehicle Credit can be carried forward to the extent it is claimed for business use on Form 3800, General Business Credit, as otherwise appropriate.

See Topic H, FAQs 20-21 regarding claiming and transferring the clean vehicle credits.

Q8. What does “original use” mean? (updated July 26, 2024)

A8. For purposes of the New Clean Vehicle Credit, “original use” means the first use to which the vehicle is put after it is sold, registered or titled. A vehicle is not a new clean vehicle if (1) another person (including a dealer) has ever purchased, registered or titled the clean vehicle and (2) placed it in service for any purpose (including as a dealer demonstrator vehicle). Where a vehicle is acquired for lease to another person, the lessor (not the lessee) is the original user. Test drives by potential buyers do not disqualify a vehicle from eligibility for the New Clean Vehicle Credit provided the dealer has not titled the vehicle to itself as a demonstrator vehicle.

Q9. What is a qualified manufacturer? (added Dec. 29, 2022)

A9. A qualified manufacturer is a manufacturer that enters into a written agreement with the IRS to file periodic reports with VINs and other information for each vehicle they manufacture. The IRS maintains a list of qualified manufacturers that can be found at Clean vehicle credit qualified manufacturer requirements.

Q10. Do I have to report the vehicle identification number (VIN) on my return to claim the New Clean Vehicle Credit? (updated April 16, 2024)

A 10. Yes. The VIN of the new clean vehicle is required to be included on Schedule A (Form 8936), Clean Vehicle Credit Amount, which must be filed with Form 8936, Clean Vehicle Credit when you file your income tax return.

Q11. Can the New Clean Vehicle Credit be split among multiple owners? (added March 31, 2023)

A11. No. In certain instances, multiple taxpayers may purchase, place in service and be titled as owners of a single vehicle. For example, a married couple that files separate tax returns may jointly purchase and take possession of a new clean vehicle that qualifies for the credit and both be titled as owners of the vehicle. However, only one taxpayer can claim the New Clean Vehicle Credit per vehicle placed in service, and the credit may not be allocated or prorated among multiple taxpayers. In the case of married taxpayers filing jointly, either spouse may be identified as the owner claiming the New Clean Vehicle Credit.

The name and taxpayer identification number of the owner claiming the New Clean Vehicle Credit should be listed on the seller’s report. See Topic B, FAQ 9. Accordingly, multiple owners of a new clean vehicle should inform the seller which owner will claim the New Clean Vehicle Credit so that the seller can identify that taxpayer on the seller’s report. The credit would be allowed only on the tax return of the owner listed in the seller’s report.

Q12. What happens if the new clean vehicle sale is cancelled or the vehicle is returned or resold shortly after purchase? (updated July 26, 2024)

A12. If a sale is cancelled before the taxpayer places the vehicle in service, i.e., before the taxpayer takes possession of the vehicle, the taxpayer may not claim the New Clean Vehicle Credit. The vehicle will still be eligible for a New Clean Vehicle Credit upon a subsequent qualifying sale to another taxpayer.

In the case of a return made within 30 days of placing the vehicle in service, the taxpayer may not claim the New Clean Vehicle Credit with respect to the vehicle. Such vehicle, once returned, was already placed in service by a taxpayer, and the New Clean Vehicle Credit is not available to a subsequent buyer.

In the case of a resale by the taxpayer made within 30 days of placing the vehicle in service, the taxpayer is treated as having purchased the vehicle with an intent to resell and cannot claim a New Clean Vehicle Credit with respect to the vehicle. Such vehicle was already placed in service by a taxpayer, and a New Clean Vehicle Tax Credit is not available to a subsequent buyer. For more information see Topic D, FAQ 12 and Topic H, FAQ 18.

Q13. If I place a vehicle in service in 2024 and it has battery components manufactured by a foreign entity of concern but it meets the critical mineral applicable percentage requirements for 2024, does my vehicle qualify for the $3,750 portion of the New Clean Vehicle Credit for meeting critical mineral requirements? (added Dec. 26, 2023)

A13. No, a vehicle placed in service after Dec. 31, 2023, with battery components manufactured or assembled by a foreign entity of concern is not eligible for any amount of New Clean Vehicle Credit, as statutorily provided in section 30D(d)(7)(B). If a vehicle has any battery components that were manufactured or assembled by a foreign entity of concern, then the vehicle is no longer considered a new clean vehicle and therefore is not eligible for a partial New Clean Vehicle Credit ($3,750).

Q14. Is a qualified manufacturer required in its written report to make an attestation under penalties of perjury demonstrating compliance with the foreign entity of concern requirements of section 30D? (added Dec. 26, 2023)

A14. Yes, a qualified manufacturer is required to include in its written report the following attestation: “Under penalties of perjury, I declare that I have examined this certification, including accompanying documents, and to the best of my knowledge and belief, the facts presented in support of this certification are true, correct, and complete.” As such, a qualified manufacturer’s attestation of compliance with the foreign entity of concern requirements should be made to the best of the qualified manufacturer’s knowledge and belief.

Q15. I input a VIN for a vehicle identified by a qualified manufacturer as an eligible vehicle, but it came back as ineligible. Is this accurate? Who do I contact for additional information? Is there a list of vehicles that are eligible for the credit? (added July 26, 2024)

A15. Qualified manufacturers identify and report eligible VINs to the IRS. IRS Energy Credits Online provides real-time confirmation of a vehicle’s eligibility using VINs provided by qualified manufacturers. Qualified manufacturers submit VINs of qualifying vehicles which are matched to time-of-sale reports. If a qualified manufacturer has not provided the IRS with a VIN for an eligible vehicle, the time-of-sale report will be rejected until the manufacturer provides the VIN to the IRS. We are working with qualified manufacturers to ensure all eligible VINs have been submitted. For a list of vehicles that qualify for the New Clean Vehicle Credit see FAQ 2.

Q16. If a taxpayer buys more than one clean vehicle, will the taxpayer get credit for each vehicle? What about married couples? (added July 26, 2024)

A16. It depends. One credit is allowed per each new clean vehicle. A taxpayer may make no more than two credit transfer elections per taxable year. In the case of a joint income tax return, each spouse may make two transfer elections per taxable year, for a maximum of four credit transfer elections in a taxable year. For previously owned clean vehicles, see Topic D, FAQ 4.

Q17. What if the battery capacity on the seller report provided to me doesn’t match the battery capacity reported by the qualified manufacturer? Where can I obtain accurate battery capacity or specific kilowatt information for each vehicle reported to the IRS? (added July 26, 2024)

A17. The manufacturer reports the VIN as eligible to the IRS and the battery capacity entered on that report should be at least 7 kwh. IRS Energy Credits Online will confirm, based on data submitted by the manufacturer, that the VIN is eligible including that it meets the battery capacity requirements. The battery capacity entered on the seller report must be at least 7 kwh. The seller report will not be rejected if the manufacturer has reported the VIN as eligible to the IRS and the battery capacity entered is at least 7 kwh, even if it does not match what was reported by the qualified manufacturer. If you’d like further details, look for more information at Welcome to VIN Decoding. 

Q18. If I lease a vehicle from a dealership for my personal use, am I eligible to claim a clean vehicle credit? (added July 26, 2024)

A18. No, only vehicle owners are eligible for a new, previously owned, or commercial clean vehicle credit. In the case of a leased vehicle, the lessor (leasing business receiving compensation for use of the vehicle) and not the lessee generally is the owner of the vehicle. The lessee who is paying compensation in exchange for the right to drive the vehicle is not eligible for a clean vehicle credit, regardless of whether the lessee is using the vehicle for business or personal use.