TAX ALERT | April 19, 2023
Executive summary: Fewer models to qualify for clean vehicle credit in short term
Treasury and the IRS issued proposed regulations that impact the credit calculation for vehicles eligible for the clean vehicle credit. These regulations affect certain vehicles placed in service after Apr. 17, 2023. In addition to other requirements imposed by changes to the clean vehicle credit through the Inflation Reduction Act (IRA), new critical mineral and battery component requirements determine the value of the credit for an eligible vehicle. For now, there are fewer vehicle models that yield a full or partial clean vehicle if they are placed in service after Apr. 17, 2023. The number of qualifying vehicles is likely to increase as manufacturers strive to satisfy the requirements, maximizing credits for their customers.Fewer vehicles to qualify for clean vehicle credit in the short term
Critical mineral and battery component requirements
The clean vehicle credit is available for the purchase of certain plug-in hybrid and electric vehicles. Prior to the IRA, the credit was determined as a function of a qualifying vehicle’s battery capacity in kilowatt hours. The IRA’s modifications to the credit included new requirements on the origin of critical minerals and battery components used in a qualifying vehicle. Each requirement, if met, represents a $3,750 component of the maximum credit of $7,500 per vehicle. The new critical mineral and battery component requirements apply to vehicles placed in service after Apr. 17, 2023. Additional requirements are imposed on both vehicles and buyers.Current list of credit-eligible vehicles
A qualified manufacturer that asserts its vehicles are eligible for the clean vehicle credit must certify their eligibility to the IRS through periodic written reports. Satisfaction of the critical mineral and battery component requirements is included in the manufacturer’s certification. The IRS publishes a list of credit-eligible vehicles. Currently, the list is available on a U.S. Department of Energy website. As of this writing, vehicles placed in service after Apr. 17, 2023 are eligible for credits as follows:Model year | Make and model | Credit amount | MSRP Limitation |
2023 – 2024 | Cadillac LYRIQ | $7,500 | $80,000 |
2024 | Chevrolet Blazer | $7,500 | $80,000 |
2022 - 2023 | Chevrolet Bolt | $7,500 | $55,000 |
2022 – 2023 | Chevrolet Bolt EUV | $7,500 | $55,000 |
2024 | Chevrolet Equinox | $7,500 | $80,000 |
2024 | Chevrolet Silverado | $7,500 | $80,000 |
2022 – 2023 | Chrysler Pacifica PHEV | $7,500 | $80,000 |
2022 – 2023 | Ford E-Transit | $3,750 | $80,000 |
2022 – 2023 | Ford Escape Plug-in Hybrid | $3,750 | $80,000 |
2022 – 2023 | Ford F-150 Lightning (Extended Range Battery) | $7,500 | $80,000 |
2022 – 2023 | Ford F-150 Lightning (Standard Range Battery) | $7,500 | $80,000 |
2022 – 2023 | Ford Mustang Mach-E (Extended Range Battery) | $3,750 | $80,000 |
2022 – 2023 | Ford Mustang Mach-E (Standard Range Battery) | $3,750 | $80,000 |
2022 – 2023 | Jeep Grand Cherokee PHEV 4xe | $3,750 | $80,000 |
2022 – 2023 | Jeep Wrangler PHEV 4xe | $3,750 | $80,000 |
2022 – 2023 | Lincoln Aviator Grand Touring | $7,500 | $80,000 |
2022 – 2023 | Lincoln Corsair Grand Touring | $3,750 | $80,000 |
2022 – 2023 | Tesla Model 3 Performance | $7,500 | $55,000 |
2022 – 2023 | Tesla Model 3 Standard Range Rear Wheel Drive | $3,750 | $55,000 |
2022 – 2023 | Tesla Model Y All-Wheel Drive | $7,500 | $80,000 |
2022 – 2023 | Tesla Model Y Long Range All-Wheel Drive | $7,500 | $80,000 |
2022 – 2023 | Tesla Model Y Performance | $7,500 | $80,000 |
Washington National Tax takeaways
The list of credit-eligible vehicle models is expected to expand as manufacturers comply with the critical mineral and battery component requirements for models produced in the future. Further, it is expected that the IRS and Department of Energy will maintain an updated list for consumers to identify eligible vehicles. Fortunately for vehicle buyers, use of the Department of Energy list and reliance on seller’s reports accompanying credit-eligible vehicles should reduce confusion regarding credit eligibility.Questions or Want to Talk?
Call us directly at 972.221.2500 (Flower Mound) or 940.591.9300 (Denton), or complete the form below and we’ll contact you to discuss your specific situation.This article was written by Christian Wood, Deborah Gordon, Brent Sabot and originally appeared on 2023-04-19. Reprinted with permission from RSM US LLP.
© 2024 RSM US LLP. All rights reserved. https://rsmus.com/insights/tax-alerts/2023/Fewer-vehicles-qualify-clean-vehicle-credit-short-term.html
RSM US LLP is a limited liability partnership and the U.S. member firm of RSM International, a global network of independent assurance, tax and consulting firms. The member firms of RSM International collaborate to provide services to global clients, but are separate and distinct legal entities that cannot obligate each other. Each member firm is responsible only for its own acts and omissions, and not those of any other party. Visit rsmus.com/about for more information regarding RSM US LLP and RSM International.
The information contained herein is general in nature and based on authorities that are subject to change. RSM US LLP guarantees neither the accuracy nor completeness of any information and is not responsible for any errors or omissions, or for results obtained by others as a result of reliance upon such information. RSM US LLP assumes no obligation to inform the reader of any changes in tax laws or other factors that could affect information contained herein. This publication does not, and is not intended to, provide legal, tax or accounting advice, and readers should consult their tax advisors concerning the application of tax laws to their particular situations. This analysis is not tax advice and is not intended or written to be used, and cannot be used, for purposes of avoiding tax penalties that may be imposed on any taxpayer.