Key Year End Tax Planning Series: Electric Vehicle Tax Credit

By Scott Hennessy On December 12, 2023
Scott is a CPA & Manager at BSB.

Thinking About Buying a New Car? Consider an EV! EVs provide a great year-end tax planning opportunity.

The credit is available for both individuals and their businesses.​

To qualify, you must:​

  • You must buy it for your own use, not for resale​
  • Use it primarily in the U.S.​

Additionally, your AGI may not exceed:​

  • $300K for married filing joint​
  • $225K for head of households​
  • $150K for all other filers

Qualified Vehicles:

To qualify, a vehicle must:​

  • Have a battery capacity of at least 7 kilowatt hours​
  • Have a gross vehicle weight rating of less than 14,000 pounds​
  • Undergo final assembly in North America​
  • Meet critical mineral and battery component requirements​

The sale qualifies only if:

  • You buy the vehicle new​
  • The seller reports required information to you at the time of sale and to the IRS.

In addition, the vehicle's MSRP can't exceed:

  • $80,000 for vans, SUVs and pickup trucks​
  • $55,000 for other vehicles

Use this IRS Link to Check if your Vehicle Qualifies!

Credit Amount:

For vehicles placed in service Jan 1 to April 17, 2023:​

  • Up to $7,500 total​

For vehicles placed in service April 18, 2023 and after:​

Vehicles will have to meet all of the same criteria listed above, plus meet new critical mineral and battery component requirements for a credit up to:​

  • $3,750 if the vehicle meets the critical minerals requirement only​
  • $3,750 if it meets the battery components requirement only​
  • $7,500 if the vehicle meets both

A vehicle that doesn't meet either requirement, will not be eligible for a credit.

How to Determine Eligibility: “Tax Liability”

How can you tell whether you would benefit from the tax credit?

  • You must have a tax liability above $7,500


  • You are only entitled to the maximum $7,500 tax credit when your tax liability for the year is $7,500 or more.​
  • If your tax liability is $3,000 then you are only entitled to a $3,000 credit.​
  • NOTE: This is different from your refund

Tip: Find your tax liability from the prior year on line 24 of the Form 1040

If you're a business owner in the New York Metro Area and need help making the best decisions for your business, request a consultation with our experienced accountants today. We look forward to providing you service.

Want a Partner like BSB in Your Business’ Corner?

Schedule a Consultation