26 U.S.C. § 30D — Clean vehicle credit

(a) Allowance of credit: If you place one or more new clean vehicles in service during the tax year, you get a credit against your taxes. It equals the sum of the amounts figured under subsection (b) for each vehicle. (b) Per vehicle dollar limitation: (1) In general: For each vehicle, add together the amounts from paragraphs (2) and (3). (2) Critical minerals: If the vehicle meets the critical-minerals sourcing requirement in subsection (e)(1)(A), you get $3,750. (3) Battery components: If the vehicle meets the battery-components requirement in subsection (e)(2)(A), you get another $3,750. So the maximum credit per vehicle is $7,500, but a vehicle that meets only one of the two requirements gets only $3,750. (c) Application with other credits: (1) The part of this credit tied to depreciable business property becomes part of the general business credit under section 38(b), instead of being claimed directly under subsection (a). (2) The rest of the credit is treated as a personal credit under subpart A of this chapter. (d) New clean vehicle: (1) In general: A vehicle counts as a "new clean vehicle" if it meets all of these conditions: its original use starts with you; you acquired it for your own use or to lease out, not to resell; a "qualified manufacturer" (defined in paragraph (3)) made it; it's treated as a motor vehicle under title II of the Clean Air Act; it weighs less than 14,000 pounds; it's significantly powered by an electric motor that draws from a battery with at least 7 kilowatt-hours of capacity and that can be recharged from an outside power source; its final assembly happened in North America; and the seller gives both you and the Secretary a report — at the time and in the way the Secretary requires — that includes your name and taxpayer ID number, the vehicle's identification number (unless none was assigned), the battery's capacity, confirmation that you're the vehicle's original user, the maximum credit you can claim for the vehicle, and, if you elected to transfer the credit under subsection (g)(1), the amount described in subsection (g)(2)(C). (2) Motor vehicle: Same definition as elsewhere — built mainly for public road use, not a rail vehicle, at least four wheels. (3) Qualified manufacturer: This means a manufacturer, as EPA's Clean Air Act regulations define that term, that has signed a written agreement with the Secretary to regularly report vehicle identification numbers and other required information about the vehicles it makes. (4) Battery capacity: This is how much electricity a battery can store, measured in kilowatt-hours, from a full charge down to empty. (5) Final assembly: This means the process where the manufacturer completes a new clean vehicle — at or through a plant, factory, or similar place — so that it's ready to deliver to a dealer or importer with every mechanical part it needs, whether or not those parts are permanently attached yet. (6) New qualified fuel cell motor vehicle: A "new qualified fuel cell motor vehicle," as defined in section 30B(b)(3), also counts as a "new clean vehicle" here, as long as it meets the reporting and manufacturer requirements in subparagraphs (G) and (H) of paragraph (1). (7) Excluded entities: Two kinds of vehicles are excluded from being a "new clean vehicle," no matter what else is true about them. First, any vehicle placed in service after December 31, 2024, if any of its battery's critical minerals were extracted, processed, or recycled by a "foreign entity of concern" (as defined in the Infrastructure Investment and Jobs Act). Second, any vehicle placed in service after December 31, 2023, if any of its battery's components were manufactured or assembled by a foreign entity of concern. (e) Critical mineral and battery component requirements: (1) Critical minerals requirement: (A) In general: A vehicle meets this requirement if the percentage — by value — of the battery's "applicable critical minerals" (as section 45X(c)(6) defines them) that were either extracted or processed in the United States or in a country with a U.S. free trade agreement, or recycled in North America, is at least as high as the applicable percentage below. The manufacturer has to certify this. (B) Applicable percentage: The required percentage depends on when the vehicle is placed in service. Before January 1, 2024 (but after the Secretary issues proposed guidance): 40%. During 2024: 50%. During 2025: 60%. During 2026: 70%. (2) Battery components: (A) In general: Similarly, a vehicle meets this requirement if the percentage — by value — of the battery's components that were manufactured or assembled in North America is at least as high as the applicable percentage, again certified by the manufacturer. (B) Applicable percentage: Before January 1, 2024: 50%. During 2024 or 2025: 60%. During 2026: 70%. (3) Regulations and guidance: (A) In general: The Secretary must issue whatever regulations or guidance are needed to carry this out, including rules on recordkeeping and reporting. (B) Deadline for proposed guidance: The Secretary had to issue proposed guidance on all this no later than December 31, 2022. (f) Special rules: (1) Basis reduction: If you claim this credit, you must reduce the vehicle's tax basis by the credit amount. (2) No double benefit: Any other deduction or credit for a vehicle that also qualifies for this credit gets reduced by the amount of credit you claimed here. (3) [Repealed by Public Law 117–169, effective August 16, 2022.] (4) Property used outside United States not qualified: No credit for property used mainly outside the U.S. (5) Recapture: The Secretary must write regulations to claw back the credit's benefit if a vehicle later stops being eligible. (6) Election not to take credit: You can choose not to claim this credit for a particular vehicle. (7) Interaction with air quality and motor vehicle safety standards: A vehicle isn't eligible unless it meets the Clean Air Act's requirements for its make and model year (or the equivalent state law under an approved waiver), and it meets the motor vehicle safety rules in sections 30101 through 30169 of title 49. (8) One credit per vehicle: Only one credit is ever allowed per vehicle, tracked by its vehicle identification number — this includes vehicles for which you used the transfer election under subsection (g). (9) VIN requirement: You must include the vehicle's identification number on your tax return to claim any credit. (10) Limitation based on modified adjusted gross income: (A) In general: You get no credit at all for a year if the lower of your modified adjusted gross income for that year or the year before goes over a threshold amount. (B) Threshold amount: The threshold is $300,000 for a joint return or a surviving spouse, $225,000 for a head of household, and $150,000 for everyone else. (C) Modified adjusted gross income: This means your adjusted gross income, plus any income you excluded under sections 911, 931, or 933 (rules for certain income earned abroad or in U.S. territories). (11) Manufacturer's suggested retail price limitation: (A) In general: You get no credit if the vehicle's suggested retail price is above the applicable limit. (B) Applicable limitation: $80,000 for a van, $80,000 for a sport utility vehicle, $80,000 for a pickup truck, and $55,000 for any other type of vehicle. (C) Regulations and guidance: The Secretary must issue guidance defining these vehicle classifications, using criteria similar to what the EPA and Department of Energy already use to classify vehicle size and class. (g) Transfer of credit: (1) In general: If you buy a new clean vehicle, you can elect to transfer your credit to the dealer who sold it to you, instead of claiming it yourself, subject to the Secretary's regulations. (2) Eligible entity: The dealer can receive the transferred credit only if the dealer has: registered with the Secretary, in the form and by the deadline the Secretary sets; told you — before or at the time of sale — the vehicle's suggested retail price, the value of this credit and any other available incentives, and the amount the dealer is paying you as part of this transfer; actually paid you, at or before the sale (in cash or as a down payment toward the purchase), an amount equal to the credit; and made sure that other available incentives — like rebates or discounts — aren't limited by your choice to transfer the credit, and that transferring the credit doesn't limit those other incentives either. (3) Timing: You must make this election no later than the day you buy the vehicle. (4) Revocation of registration: If the Secretary finds that a dealer failed to meet the requirements in paragraph (2), the Secretary can revoke that dealer's registration. (5) Tax treatment of payments: The payment you get from the dealer under paragraph (2)(C) isn't counted as your taxable income, and the dealer can't deduct it either. (6) Application of certain other requirements: If you make this election: the basis-reduction and no-double-benefit rules in subsection (f)(1) and (2) still apply to you, as if you had claimed the credit yourself; the election-not-to-take-credit rule in subsection (f)(6) doesn't apply to you; and the VIN-on-return requirement in subsection (f)(9) counts as satisfied as long as the dealer reports the VIN to the Secretary instead. (7) Advance payment to registered dealers: (A) In general: The Secretary must set up a program to pay registered dealers in advance, for the total amount of credits tied to vehicles they've sold where buyers made this election. (B) Excessive payments: Rules like those in section 6417(d)(6) apply if a dealer gets paid too much. (C) Treatment of advance payments: For purposes of the Treasury payment rules in section 1324 of title 31, these advance payments are treated the same as a tax refund. (8) Dealer: This means a business licensed by a state, D.C., Puerto Rico, another U.S. territory, a tribal government, or an Alaska Native Corporation to sell vehicles. (9) Indian tribal government: This means the recognized governing body of any Indian or Alaska Native tribe, band, or similar group, as individually listed in the most recent list published under the Federally Recognized Indian Tribe List Act of 1994. (10) Recapture: If you elected to transfer the credit and got paid by the dealer, but it turns out you weren't actually eligible for the credit because of the income limit in subsection (f)(10), your taxes for that year go up by the amount the dealer paid you. (h) Termination: No credit is allowed under this section for any vehicle you acquire after September 30, 2025.