The Inflation Reduction Act changed the Electric Vehicle (EV) tax credit, which made the EV tax credit more difficult to claim. However, it also created the Commercial Clean Vehicle Credit, which is available to businesses & does not have the same restrictions as the original credit.
Starting in 2023, the original Clean Vehicle Credit is subject to income & cost restrictions. If you make more than $150,000 per year(for single filers) or $300,000 per year (married filing jointly), you cannot qualify. If you meet the income restrictions, the credit is only applicable to EV cars that cost $55,000 or less or SUVs that cost $80,000 or less.
Furthermore, the vehicles must be assembled in North America & the battery components must come from countries with whom the U.S. has free-trade agreements. You can check the VIN decoder on the Department of Transportation’s website to see if a vehicle qualifies for the EV tax credit https://www.nhtsa.gov/vin-decoder.
The good news is the newly established Commercial Clean Vehicle Credit (CCVC) avoids all the restrictions above. This credit is typically up to $7,500 for commercial vehicles that weigh less than 14,000 pounds. This credit works with the depreciation rules. Upon claiming the credit, the purchase price is reduced & the remaining cost is subject to depreciation.
The vehicle must be in your practice name. If you do not have a car in your practice, talk to us today to see if you should.
References:
https://www.irs.gov/credits-deductions/commercial-clean-vehicle-credit