Discover the 2024 New Cars That Qualify for Clean Vehicle Tax Credits

As you explore the exciting world of 2024 New Cars, you might be wondering how to save money while embracing the latest automotive technology. For those considering eco-friendly options, the Clean Vehicle Tax Credit offers significant savings on qualifying new plug-in electric vehicles (EVs) and fuel cell vehicles (FCVs) placed in service in 2023 and beyond. This incentive, updated by the Inflation Reduction Act of 2022, can substantially reduce the cost of your new car.

To help you navigate this opportunity, we’ve compiled essential information based on IRS guidelines. For detailed specifics, you can refer to Publication 5866, New Clean Vehicle Tax Credit Checklist PDF and Publication 5905, Information for Consumers Purchasing a New or Used Clean Vehicle PDF. Understanding these credits is crucial when making informed decisions about your next vehicle purchase.

It’s important to note that sellers are required to provide you with information regarding your vehicle’s eligibility for the credit at the point of sale. They must also register online and report this information to the IRS. Without this crucial seller reporting, your 2024 new car will not be eligible for the clean vehicle tax credit.

If you are also interested in exploring options beyond new vehicles, you can find more information on credits for used clean vehicles, qualified commercial clean vehicles, and new plug-in EVs purchased before 2023.

Who Can Benefit from the Clean Vehicle Credit When Buying 2024 New Cars?

Individuals and businesses looking to purchase 2024 new cars may qualify for a tax credit up to $7,500 under Internal Revenue Code Section 30D. This credit is specifically designed for those who buy a new, qualified plug-in EV or fuel cell electric vehicle (FCV). The Inflation Reduction Act of 2022 brought significant changes to the rules governing this credit for vehicles acquired from 2023 through 2032, impacting how you can save on your 2024 new car.

To be eligible for this credit, you must meet certain requirements:

Purchase for Personal Use: The vehicle must be bought for your own use and not for resale.
Primary Use in the U.S.: The vehicle must be used primarily within the United States.

Furthermore, your financial eligibility is determined by your modified adjusted gross income (AGI), which must not exceed the following thresholds:

$300,000: For married couples filing jointly or surviving spouses.
$225,000: For heads of households.
$150,000: For all other filing statuses.

Eligibility is determined based on your modified AGI from either the year you take delivery of the vehicle or the preceding year, whichever is lower. If your modified AGI falls below the threshold in either of these years, you are eligible to claim the credit.

It’s also important to understand that if you do not transfer the credit at the point of sale to a dealership to reduce your upfront cost, the clean vehicle credit is nonrefundable when you file your taxes. This means the credit amount cannot exceed your tax liability, and any unused credit cannot be carried forward to future tax years. Therefore, understanding your tax situation is important when considering this benefit for your 2024 new car purchase.

Understanding the Credit Amount for Your 2024 New Car

The amount of the clean vehicle tax credit for your 2024 new car depends on when the vehicle was placed in service (delivery date), irrespective of the purchase date. This date is a critical factor in determining the credit calculation.

Credit for Vehicles Placed in Service Between January 1 and April 17, 2023:

For vehicles placed in service during this period, the tax credit was calculated based on battery capacity:

Base Amount: $2,500
Battery Capacity Bonus: Plus $417 for vehicles with at least 7 kilowatt-hours (kWh) of battery capacity.
Additional Capacity Bonus: Plus $417 for each kWh of battery capacity exceeding 5 kWh.
Maximum Credit: Capped at $7,500.

In most cases, the minimum credit for vehicles with the minimum 7 kWh battery capacity was $3,751 ($2,500 + 3 times $417).

Credit for Vehicles Placed in Service On or After April 18, 2023:

For 2024 new cars and those placed in service from April 18, 2023, onward, the credit calculation incorporates new critical mineral and battery component requirements. To qualify for the credit, vehicles must meet the previously listed criteria and these new requirements. The credit amount is structured as follows:

Critical Minerals Requirement Only: $3,750 if the vehicle meets only the critical minerals requirement.
Battery Components Requirement Only: $3,750 if the vehicle meets only the battery components requirement.
Both Requirements Met: $7,500 if the vehicle meets both the critical minerals and battery components requirements.

Vehicles that do not meet either the critical mineral or battery component requirements are not eligible for any clean vehicle tax credit. As you consider 2024 new cars, ensure you verify whether they meet these updated requirements to maximize your potential tax credit.

Identifying Qualified 2024 New Cars

To determine if a 2024 new car qualifies for the clean vehicle credit, you can utilize the tool available at fueleconomy.gov. This resource will help you check specific makes and models.

Generally, to qualify, a vehicle must meet several technical and manufacturing criteria:

Battery Capacity: A battery capacity of at least 7 kWh.
Gross Vehicle Weight Rating (GVWR): A GVWR of less than 14,000 pounds.
Qualified Manufacturer: Manufactured by a qualified manufacturer.
North American Assembly: Final assembly must occur in North America.
Critical Minerals and Battery Components (Effective April 18, 2023): Must meet these requirements to qualify for the full or partial credit.

The sale of the 2024 new car must also meet specific conditions:

New Vehicle Purchase: The vehicle must be purchased new.
Seller Reporting: The seller must report all necessary information to you at the time of sale and to the IRS.

Additionally, the manufacturer’s suggested retail price (MSRP) of the vehicle cannot exceed certain limits:

$80,000: For vans, sport utility vehicles, and pickup trucks.
$55,000: For other vehicle types.

The MSRP includes manufacturer-installed options, accessories, and trim but excludes destination fees and is not necessarily the final price you will pay. When researching 2024 new cars, pay attention to these MSRP caps to ensure eligibility for the tax credit. You can typically find the vehicle’s weight, battery capacity, final assembly location (“final assembly point”), and VIN on the vehicle’s window sticker, aiding in your verification process.

How to Claim the Clean Vehicle Credit for Your 2024 New Car

To claim the clean vehicle credit for your 2024 new car, you will need to file Form 8936, Clean Vehicle Credits with your annual tax return. Providing your vehicle’s Vehicle Identification Number (VIN) is mandatory when claiming this credit.

Obtain a Time-of-Sale Report

Upon completing the purchase of your 2024 new car, the dealer is obligated to provide you with a paper copy of a time-of-sale report.

Record Keeping: Retain this copy for your records. It serves as confirmation that the dealership has reported the necessary purchase information to the IRS.
If You Don’t Receive a Report: If you do not receive a copy, it’s crucial to follow the step-by-step guide to ensure proper claiming of your credit.

File Form 8936 with Your Tax Return

You must complete and file Form 8936 when you file your tax return for the tax year in which you took delivery of your 2024 new car. This requirement applies whether you transferred the credit at the time of sale to reduce your initial payment or if you are claiming the credit directly on your tax return.

For any questions or concerns regarding the process, the step-by-step guide offers further assistance.

Related Resources

For more information on related credits and incentives, you can explore:

By understanding the Clean Vehicle Tax Credit, you can make informed decisions when choosing your 2024 new car and potentially save a significant amount on your purchase while contributing to a greener future.