Tax Credits for Electric Vehicles and Charging Infrastructure

Commercial fleets and tax-exempt organizations that buy a qualified commercial clean vehicle may qualify for a clean vehicle tax credit per vehicle (these include all-electric, plug-in hybrid electric, or fuel cell EVs). The maximum credit is $7,500 for qualified commercial clean vehicles with gross vehicle weight ratings of under 14,000 pounds and $40,000 for all other vehicles. The credit equals the lesser of:

• 15% of your basis (i.e., purchase price) of the plug-in hybrid vehicle or 30% of your basis for full battery or fuel cell EVs
• The incremental cost of the vehicle, which depends on the year the vehicle is placed in service. Refer to:
• Notice 2023-9 for the incremental cost for qualified vehicles placed in service in calendar year 2023
• Notice 2024-5 for the incremental cost for qualified vehicles placed in service in calendar year 2024

There is no limit on the number of credits your organization can claim. Eligibility for the commercial clean vehicle tax credit is based on a number of requirements for the vehicle. Refer to the IRS Commercial Clean Vehicle Credit page for more information on qualifying vehicles. As noted by IRS, the form to claim the tax credit is still under development so be sure to check back for updates.

In Notice 2023-9 and Notice 2024-5, the IRS created a safe harbor that allows all eligible entities to identify the value of the tax credit for commercial clean vehicles acquired in 2023 and 2024, respectively, allowing taxpayers to refer to a U.S. Department of Energy analysis of the incremental cost.

For more information, see the IRS frequently asked questions for commercial clean vehicle credits.

Dealer Registration

Dealers and sellers must register with the IRS using the Energy Credits Online tool and report clean vehicle sales for purchasers and their vehicles to be eligible for tax credits. Eligible clean vehicles include all-electric and plug-in hybrid EVs with a gross vehicle weight of less than 14,000 pounds and a battery capacity of at least 7 kilowatt hours, as well as fuel cell EVs. Dealers can reference FuelEconomy.gov to easily determine qualifying light-duty vehicles. Dealers that register with the IRS can identify if a specific vehicle is eligible by entering the VIN into the dealer portal webpage.

For more information, see the IRS frequently asked questions for the dealer and seller Energy Credits Online registration.

Time of Sale Reporting

Dealers must provide the purchaser with a copy of the accepted seller report (also known as a time of sale report), documenting the vehicle's eligibility for the clean vehicle tax credit. For additional information, see the IRS New and Used Clean Vehicle Time-of-Sale Reporting User Guide, the Time of Sale Reporting Guide, and the frequently asked questions about registering for seller reporting and credit transfers.

The IRS released Revenue Procedure 2024-26 (Section 6) to provide rules regarding updating seller reports specifically when there is an error on a seller report, a cancelled sale, or a vehicle return.

Transferring Clean Vehicle Tax Credits and Advance Payment Request

Dealers and sellers that register with the IRS will then be able to allow customers to transfer their clean vehicle tax credit to the dealership if the dealer or seller meets IRS qualifications. Transferring the tax credit at the time of sale makes it easier for customers to immediately save up to $7,500 per new vehicle and up to $4,000 per pre-owned vehicle, which can help registered dealers grow their businesses. When completing a sale, an eligible customer transfers their credit to the dealer so the dealer can provide that customer with a reduced purchase price. For additional information see the IRS frequently asked questions for the transfer of new clean vehicle credit. The dealer subsequently submits information electronically regarding the transfer, including a time of sale report, using the Energy Credits Online tool. The dealer then receives an advance payment for the value of the credit. The IRS expects to issue advance payments to dealers within 72 hours of when the customer elects to transfer the credit.

Refer to the IRS checklist outlining information the dealer must provide to the customer. Lastly, the IRS guide for new and used clean vehicle dealers and sellers outlines the step-by-step process for dealer registration, time of sale reporting, and advance payment requests.

Manufacturers of EVs must enter a written agreement with the IRS and report information for each vehicle to qualify for clean vehicle tax credits. Instructions to become a qualified manufacturer, to submit this agreement, and to send the necessary vehicle information can be found on the IRS website and in Revenue Procedure 2024-26, which provides procedures for qualified manufacturers to submit documentation demonstrating compliance for upfront review by the IRS. As noted in the Time of Sale Reporting Guide, dealers/sellers will not be able to sell vehicles for a clean vehicle credit until qualified manufacturers have submitted the VIN to the IRS and the vehicle is determined to be eligible.

Fuel cell EVs aren’t required to be made by a qualified manufacturer but doing so will make it easier for people to claim credits for your vehicles. Manufacturers can review the full list of vehicle eligibility requirements.

If you purchase EV charging equipment for a business, fleet, or tax-exempt entity you may be eligible for a tax credit. Starting on Jan. 1, 2023, the value of this credit is 6% of the cost of property subject to depreciation, with a maximum credit of $100,000 for each single item of property.

A single item of property is each charging port, as well as each energy storage property for electricity (this tax credit also applies to fueling dispensers and energy storage for hydrogen, natural gas, propane, E85, or biodiesel blends of at least 20%[B20]). The costs of components and parts that are essential to the operation of the charging port or fuel dispenser, including labor costs for constructing and installing the property, are also eligible for the credit. The entity claiming the credit must be the owner of the item(s).

Projects that meet prevailing wage and apprenticeship requirements may be eligible to receive a tax credit equal to 30% of the cost of property subject to depreciation.

Eligibility is also based on the location of installation being in an eligible census tract. To help you determine if your installation location is in an eligible census tract, visit the 30C Tax Credit Eligibility Locator page and mapping tool from Argonne National Laboratory. Refer to Businesses and the Alternative Fuel Vehicle Refueling Property Credit for more details.

Calculate how much you can save from converting your fleet to electric vehicles.

Tax-exempt entities can qualify to receive full payment for the federal alternative fuel infrastructure tax credit. Starting on Jan. 1, 2023, the value of this credit is 6% of the cost of property subject to depreciation, with a maximum credit of $100,000 for each single item of property.

A single item of property is each charging port, as well as each energy storage property for electricity (this tax credit also applies to fueling dispensers and energy storage for hydrogen, natural gas, propane, E85, or biodiesel blends of at least 20%[B20]). The costs of components and parts that are essential to the operation of the charging port or fuel dispenser, including labor costs for constructing and installing the property, are also eligible for the credit. Your organization or the seller installing the property could claim the credit, and the choice is up to you to determine which path is more beneficial.

Projects that meet prevailing wage and apprenticeship requirements may be eligible to receive a 30% tax credit.

Eligibility is also based on the location of installation being in an eligible census tract. To help you determine if your installation location is in an eligible census tract, visit the 30C Tax Credit Eligibility Locator page and mapping tool from Argonne National Laboratory. Refer to Tax-Exempt Entities and the Alternative Fuel Vehicle Refueling Property Credit for more details.

The tax credit can be obtained via direct pay, also referred to as elective pay. Visit the White House site on direct pay to learn more and follow the steps listed to apply. You must register with the IRS to make an elective pay election. For additional information, see the IRS elective pay overview and frequently asked questions.

Tax-exempt entities may also wish to consider obtaining the value of the credit indirectly. Per a provision in the tax code, sellers/installers of charging infrastructure can be treated as the taxpayer, as long as they disclose the amount of the credit to the tax exempt/government entity. The buyer can then negotiate a lower upfront cost for the acquisition and installation of charging equipment. This approach may be helpful in instances where upfront funding available to tax-exempt entities is limited.

Tax-exempt entities seeking additional technical assistance about the use of electric vehicle and zero emission vehicle infrastructure may refer to the Joint Office of Energy and Transportation Technical Assistance resources.