Under the U.S. tax code, electric vehicles (EVs) eligible for tax credits fall under two primary sections: IRC 30D and IRC 45W. These sections define different eligibility criteria based on vehicle type, use, and other factors.
IRC 30D — Consumer Clean Vehicle Credit
- Eligible Vehicles: New plug-in electric vehicles (EVs) and fuel cell electric vehicles (FCEVs) purchased by consumers.
- Vehicle Requirements:
- Must be plug-in EVs or fuel cell EVs that meet specific battery capacity and critical mineral requirements.
- Must be primarily for use on public roads.
- Subject to limits like a $25,000 maximum sale price for certain vehicles.
- Credit Details: Up to $7,500 per vehicle purchase. This credit can only be claimed once every three years per vehicle.
- Restrictions: Only applies to vehicles sold by dealers and generally has income and assembly location restrictions (involving North American assembly and critical mineral sourcing).
IRC 45W — Commercial Clean Vehicle Credit
- Eligible Vehicles: New plug-in electric vehicles or fuel cell vehicles used by businesses or tax-exempt organizations.
- Vehicle Requirements:
- The vehicle must be subject to depreciation for the business (exceptions for tax-exempt organizations not leasing).
- Must be made by a qualified manufacturer as defined by IRC 30D(d)(1)(C).
- Used in the taxpayer’s business and primarily used in the United States, not for resale.
- Must not have already received a credit under IRC 30D or 45W.
- Vehicle classification: Either a motor vehicle for purposes of Title II of the Clean Air Act primarily for public road use, or mobile machinery as defined under IRC 4053(8), which includes non-highway vehicles performing specialized functions.
- Battery Capacity Thresholds:
- For vehicles under 14,000 pounds GVWR: At least 7 kWh battery capacity.
- For vehicles 14,000 pounds GVWR or more: At least 15 kWh battery capacity.
- Fuel Cell Vehicles: Must meet fuel cell vehicle requirements under IRC 30B(b)(3)(A) and (B).
- Credit Details: The credit is 30% of the vehicle’s basis (cost).
- Additional Notes: There is no limit on the number of credits a business may claim. The credit is nonrefundable but can be carried over as a general business credit. The 45W credit is more flexible than 30D, with no income or critical mineral/battery component restrictions and no ‘entity of concern’ limitations.
Summary Table Comparison
| Feature | IRC 30D | IRC 45W |
|---|---|---|
| Eligible Users | Consumers | Businesses and tax-exempt organizations |
| Vehicle Types | New plug-in EVs and fuel cell EVs | New plug-in EVs, fuel cell EVs, or mobile machinery |
| Battery Capacity Requirement | Varies, with critical mineral/battery sourcing rules | ≥7 kWh (<14,000 lbs GVWR), ≥15 kWh (≥14,000 lbs GVWR) |
| Use | Personal use, purchased from dealer | Used in business, primarily in US, not for resale |
| Credit Amount | Up to $7,500 per vehicle | 30% of vehicle basis |
| Limitations | Income limits, assembly and sourcing requirements | No income, sourcing, or entity restrictions |
| Claim Frequency | Once every 3 years per vehicle | No limit on number of claims |
In essence, IRC 30D covers consumer purchases of new plug-in and fuel cell electric vehicles with specific qualifications, while IRC 45W provides a commercial credit aimed at businesses and tax-exempt entities purchasing qualified EVs or mobile machinery meeting defined battery and use standards.
Original article by NenPower, If reposted, please credit the source: https://nenpower.com/blog/what-types-of-electric-vehicles-are-eligible-for-tax-credits-under-irc-30d-and-irc-45w/
