Key Eligibility Criteria for PHEV Federal Tax Credit
- Vehicle Type: The credit applies to new, qualified plug-in electric vehicles (EVs) and plug-in hybrid electric vehicles (PHEVs), as well as fuel cell electric vehicles (FCVs).
- Credit Amount: The tax credit can be up to $7,500; however, some PHEVs may receive a partial credit such as $3,750 depending on the vehicle model.
- Purchase Conditions:
- The vehicle must be bought for your own use, not for resale.
- It must be used primarily within the U.S.
- Price Caps Based on MSRP:
- For SUVs, pickup trucks, and vans, the MSRP must not exceed $80,000.
- For sedans, hatchbacks, wagons, and other vehicle types, the MSRP must not exceed $55,000.
- These MSRP limits are based on the manufacturer’s suggested retail price, not the sale price or discounts applied.
- Final Assembly Location:
- The vehicle must be assembled in North America (U.S., Canada, or Mexico).
- Vehicles assembled outside North America do not qualify, regardless of brand origin.
- Income Limits (Modified Adjusted Gross Income – AGI):
- $300,000 or less for married couples filing jointly or surviving spouses.
- $225,000 or less for heads of household.
- $150,000 or less for all other filers.
- You can use your modified AGI from the year you take delivery or the year before; if your income is below the threshold in either year, you qualify for the credit.
- Dealer Reporting Requirement:
- At the time of sale, the seller must provide you with information about your vehicle’s qualifications and must also register and report this information online to the IRS.
- If the dealer fails to do this, the vehicle will not be eligible for the credit.
- Nonrefundable Credit: The credit is nonrefundable and cannot be carried forward to future tax years if it exceeds your tax liability.
- Additional Battery and Sourcing Requirements: The credit also depends on battery component and critical mineral sourcing rules, which affect eligibility but vary by vehicle.
Summary
| Eligibility Criterion | Requirement |
|---|---|
| Vehicle Type | New qualified PHEV, EV, or FCV |
| MSRP Limit | $80,000 for SUVs/trucks/vans; $55,000 for others |
| Assembly Location | Assembled in North America |
| Income Limit (AGI) | $300K married filing jointly; $225K head of household; $150K others |
| Use | Personal use, primarily in the U.S. |
| Dealer Reporting | Seller must report vehicle info to IRS at sale |
| Credit Amount | Up to $7,500 (some PHEVs partial $3,750) |
| Credit Refundability | Nonrefundable, no carryover |
This framework reflects the federal Clean Vehicle Credit rules updated under the Inflation Reduction Act of 2022, applying to vehicles purchased from 2023 through 2032.
Original article by NenPower, If reposted, please credit the source: https://nenpower.com/blog/what-are-the-eligibility-criteria-for-the-federal-tax-credit-on-phevs/
