New Electric Vehicle Tax Credit for Business Owners | USTaxAid

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New Electric Vehicle Tax Credit for Business Owners

Written by Diane Kennedy, CPA on November 4, 2022

We’ve posted about the new EV (electric vehicle) tax credit for EV vehicles. But there is one more to consider. The special “commercial clean vehicle” tax credit is much bigger, if your vehicle qualifies.

New Rules for EV Tax Credits

Can You Get an EV Tax Credit for a Golf Cart?

The New Commercial Clean Tax Credit

The EV tax credit for passenger cars and pick-ups is up to a maximum of $7,500. On the other hand, the commercial clean tax credit goes up to a maximum of $40,000. That’s a big difference!

Business owners who buy qualifying vehicle on or after 1/1/2023 for the next 10 years can take the credit. Here are more details:

The EV or mobile machinery (which includes electric vehicles used for construction, manufacturing, processing, farming, mining, drilling, or logging) must be purchased.

The vehicle is subject to a depreciation allowance. (That’s just a way for Congress to make sure it’s got business use)

The vehicle has a GVWR of 14,000 lbs or more.

The tax credit is worth the lesser of 30% of the vehicle purchase price or the incremental cost relative to a similar gasoline-powered vehicle.

For the right electric vehicle, it can be a lot easier to qualify for the clean commercial vehicle credit.

 For example, in order to get the tax credit for personal EV vehicles (not the commercial ones we’re discussing now) you must have final assembly of the car in North America. There is an income cap. If your modified adjusted gross income is over $150K/$225K/$300K (single, HOH and married filing jointly), you can’t get the tax credit. A vehicle can’t be over $55K ($80K for pick ups and SUVS). And the batteries and components must be manufactured in North America.

None of these additional requirements apply for the clean commercial vehicles.

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