Credit amount

These are the steps we use to calculate the credit amount:

1. We find the maximum credit amount based on the gross vehicle weight rating (GVWR) of the vehicle:

• Less than 14,000 pounds (typically cars, vans, trucks, and similar passenger-sized vehicles): maximum credit $7,500
• 14,000 pounds or more (typically larger vehicles like school buses and semi-trucks): maximum credit $40,000

2. We calculate a percentage of your basis (the amount of your investment for tax purposes) in the vehicle based on engine type:

• 30% of basis for a vehicle that is not powered by a gasoline or diesel internal combustion engine, such as an electric vehicle (EV) or fuel cell electric vehicle (FCEV).
• 15% of basis for a vehicle that is powered (even partially) by a gasoline or diesel internal combustion engine, such as a plug-in-hybrid electric vehicles (PHEV).

3. We find the incremental cost of the vehicle (the excess of its purchase price over that of a comparable vehicle powered only by gas or diesel internal combustion).

For electric vehicles placed in service in 2024,  we use the Department of Energy’s incremental cost analysis for the appropriate class of vehicle:

• $7,000 for compact plug-in hybrid electric vehicles (PHEVs) (includes mini-compact and subcompact cars) with a GVWR of less than 14,000 pounds
• $7,500 for all street electric vehicles, other than compact car PHEVs, with a GVWR of less than 14,000 pounds
• $40,000 for all other vehicles with a GVWR of 14,000 pounds or more

4. We compare the maximum credit amount, percentage of basis, and incremental cost. The smallest figureis your credit amount.
   
   

Who qualifies

Businesses and tax-exempt organizations qualify for the credit.

There is no limit on the number of credits your business can claim. For businesses, the credits are nonrefundable, so you can’t get back more on the credit than you owe in taxes. A 45W credit can be carried over as a general business credit.

Vehicles that qualify

To qualify, a vehicle must be subject to a depreciation allowance, with an exception for vehicles placed in service by a tax-exempt organization and not subject to a lease.

The vehicle must also:

• Be made by a qualified manufacturer.
• Be for use in your business, not for resale
• Be for use primarily in the United States
• Not have been allowed a credit under sections 30D or 45W

In addition, the vehicle must either be:

• Treated as a motor vehicle for purposes of title II of the Clean Air Act and manufactured primarily for use on public roads (not including a vehicle operated exclusively on a rail or rails); or
• Mobile machinery as defined in IRC 4053(8) (including vehicles that are not designed to perform a function of transporting a load over a public highway)

The vehicle or machinery must also either be:

• A plug-in electric vehicle that draws significant propulsion from an electric motor with a battery capacity of at least:
  • 7 kilowatt hours if the gross vehicle weight rating (GVWR) is under 14,000 pounds
  • 15 kilowatt hours if the GVWR is 14,000 pounds or more; or
• A fuel cell motor vehicle that satisfies the requirements of IRC 30B(b)(3)(A) and (B).