Clean Energy Vehicle Tax Credits May Benefit Individuals and Pass-Through Entities

Clean Energy Vehicle Tax Credits May Benefit Individuals and Pass-Through Entities

New Vehicle Models Qualify for Energy Efficient Tax Credits

IRC 30D provides a credit for taxpayers who have acquired a Qualified Plug-in Electric Drive Motor Vehicle. These “qualifying vehicles” include light trucks and passenger vehicles. Electric and plug-in hybrid vehicles purchased after December 31, 2009, are entitled to a credit of $2,500. However, a taxpayer may be entitled up to a maximum credit of $7,500 dependent on the propulsion energy (capacity) drawn from the vehicle’s battery. Individuals and pass-through entities may claim the Section 30D credit on Form 8936.

Recently, new models were added by the IRS to its qualified vehicle listing, including the following new 2022 Audi, BMW, and Lincoln vehicles:

  • Audi: e-tron Sportback, e-tron, A7 TFSI e Quattro, and Q5 TFSI e Quattro
  • BMW: 330e, 330e xDrive, 530e, 530e xDrive, and 740 e xDrive
  • Lincoln: Aviator Grand Touring

Biden Administration Focuses on Funding Electric Vehicle Infrastructure

Energy efficient tax credits such as the Qualified Plug-In Electric Drive Motor Vehicle Credit and Qualified Alternative Fuel Vehicle Refueling (QAFVR) are becoming increasingly popular based on the actions of President Biden and Congress. On August 5, 2021, President Biden enacted an Executive Order as part of the Build Back Better Agenda and Bipartisan Infrastructure Deal. In doing so, a new goal has been set to make half of all new vehicles sold in 2030 zero-emissions. This explicitly targets battery electric, plug-in hybrid electric, and fuel cell electric vehicles. Congress is also working to pass The Reform Bill, which will designate $15 billion in funding to electric vehicle infrastructure.

Both individuals and pass-through entities may benefit from the use of electric/clean-energy vehicles and installation of their respective charging stations as the current administration focuses on advancing fuel efficiency and emission standards.

Note: This credit phases out for a manufacturer’s vehicles when at least 200,000 qualifying vehicles have been sold for use in the United States. Specifically, beginning January 1, 2020, Tesla no longer qualifies for the tax credit as its qualifying vehicle sales exceed the 200,000-quantity limit.

Questions on this or other tax credits for your business? Contact your Opportunity Advisor or Email | Call: 804.747.0000

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About the Author

Rachel Johnson is a Tax Associate and member of Keiter’s Family, Executive & Entrepreneur Advisory Services team.

She shares her tax knowledge and insights with her clients and on our blog.

The information contained within this article is provided for informational purposes only and is current as of the date published. Online readers are advised not to act upon this information without seeking the service of a professional accountant, as this article is not a substitute for obtaining accounting, tax, or financial advice from a professional accountant.


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