26 U.S.C. § 30D — Clean vehicle credit
submitted 18 years ago by Pub. L. 110-343 to r/title-26-INTERNAL-REVENUE-CODE · 3,044 words · no verdicts yet
This law gives a tax credit up to $7,500 for buying a new clean vehicle. Half depends on where the battery's critical minerals came from. The other half depends on where its parts were made. Price, income, and battery-sourcing rules can shrink or block the credit, which ends after September 30, 2025.
(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.
There shall be allowed as a credit against the tax imposed by this chapter for the taxable year* an amount equal to the sum of the credit amounts determined under subsection (b) with respect to each new clean vehicle placed in service by the taxpayer* during the taxable year.
The amount determined under this subsection with respect to any new clean vehicle is the sum of the amounts determined under paragraphs (2) and (3) with respect to such vehicle.
In the case of a vehicle with respect to which the requirement described in subsection (e)(1)(A) is satisfied, the amount determined under this paragraph is $3,750.
In the case of a vehicle with respect to which the requirement described in subsection (e)(2)(A) is satisfied, the amount determined under this paragraph is $3,750.
So much of the credit which would be allowed under subsection (a) for any taxable year (determined without regard to this subsection) that is attributable to property of a character subject to an allowance for depreciation shall be treated as a credit listed in section 38(b) for such taxable year (and not allowed under subsection (a)).
For purposes of this title, the credit allowed under subsection (a) for any taxable year (determined after application of paragraph (1)) shall be treated as a credit allowable under subpart A for such taxable year.
For purposes of this section—
The term “new clean vehicle” means a motor vehicle—
the original use of which commences with the taxpayer,
which is acquired for use or lease by the taxpayer and not for resale,
which is made by a qualified manufacturer,
which is treated as a motor vehicle for purposes of title II of the Clean Air Act,
which has a gross vehicle weight rating of less than 14,000 pounds,
which is propelled to a significant extent by an electric motor which draws electricity from a battery which—
has a capacity of not less than 7 kilowatt hours, and
is capable of being recharged from an external source of electricity,
the final assembly of which occurs within North America, and
for which the person who sells any vehicle to the taxpayer furnishes a report to the taxpayer and to the Secretary*, at such time and in such manner as the Secretary shall provide, containing—
the name and taxpayer identification number of the taxpayer,
the vehicle identification number of the vehicle, unless, in accordance with any applicable rules promulgated by the Secretary of Transportation, the vehicle is not assigned such a number,
the battery capacity of the vehicle,
verification that original use of the vehicle commences with the taxpayer,
the maximum credit under this section allowable to the taxpayer with respect to the vehicle, and
in the case of a taxpayer who makes an election under subsection (g)(1), any amount described in subsection (g)(2)(C) which has been provided to such taxpayer.
The term “motor vehicle” means any vehicle which is manufactured primarily for use on public streets, roads, and highways (not including a vehicle operated exclusively on a rail or rails) and which has at least 4 wheels.
The term “qualified manufacturer” means any manufacturer (within the meaning of the regulations prescribed by the Administrator of the Environmental Protection Agency for purposes of the administration of title II of the Clean Air Act (42 U.S.C. 7521 et seq.)) which enters into a written agreement with the Secretary under which such manufacturer agrees to make periodic written reports to the Secretary (at such times and in such manner as the Secretary may provide) providing vehicle identification numbers and such other information related to each vehicle manufactured by such manufacturer as the Secretary may require.
The term “capacity” means, with respect to any battery, the quantity of electricity which the battery is capable of storing, expressed in kilowatt hours, as measured from a 100 percent state of charge to a 0 percent state of charge.
For purposes of paragraph (1)(G), the term “final assembly” means the process by which a manufacturer produces a new clean vehicle at, or through the use of, a plant, factory, or other place from which the vehicle is delivered to a dealer or importer with all component parts necessary for the mechanical operation of the vehicle included with the vehicle, whether or not the component parts are permanently installed in or on the vehicle.
For purposes of this section, the term “new clean vehicle” shall include any new qualified fuel cell motor vehicle (as defined in section 30B(b)(3)) which meets the requirements under subparagraphs (G) and (H) of paragraph (1).
For purposes of this section, the term “new clean vehicle” shall not include—
any vehicle placed in service after December 31, 2024, with respect to which any of the applicable critical minerals contained in the battery of such vehicle (as described in subsection (e)(1)(A)) were extracted, processed, or recycled by a foreign entity of concern (as defined in section 40207(a)(5) of the Infrastructure Investment and Jobs Act (42 U.S.C. 18741(a)(5))), or
any vehicle placed in service after December 31, 2023, with respect to which any of the components contained in the battery of such vehicle (as described in subsection (e)(2)(A)) were manufactured or assembled by a foreign entity of concern (as so defined).
The requirement described in this subparagraph with respect to a vehicle is that, with respect to the battery from which the electric motor of such vehicle draws electricity, the percentage of the value of the applicable critical minerals (as defined in section 45X(c)(6)) contained in such battery that were—
extracted or processed—
in the United States, or
in any country with which the United States has a free trade agreement in effect, or
recycled in North America,
is equal to or greater than the applicable percentage (as certified by the qualified manufacturer, in such form or manner as prescribed by the Secretary).
For purposes of subparagraph (A), the applicable percentage shall be—
in the case of a vehicle placed in service after the date on which the proposed guidance described in paragraph (3)(B) is issued by the Secretary and before January 1, 2024, 40 percent,
in the case of a vehicle placed in service during calendar year 2024, 50 percent,
in the case of a vehicle placed in service during calendar year 2025, 60 percent, and
in the case of a vehicle placed in service during calendar year 2026, 70 percent.
The requirement described in this subparagraph with respect to a vehicle is that, with respect to the battery from which the electric motor of such vehicle draws electricity, the percentage of the value of the components contained in such battery that were manufactured or assembled in North America is equal to or greater than the applicable percentage (as certified by the qualified manufacturer, in such form or manner as prescribed by the Secretary).
For purposes of subparagraph (A), the applicable percentage shall be—
in the case of a vehicle placed in service after the date on which the proposed guidance described in paragraph (3)(B) is issued by the Secretary and before January 1, 2024, 50 percent,
in the case of a vehicle placed in service during calendar year 2024 or 2025, 60 percent, and
in the case of a vehicle placed in service during calendar year 2026, 70 percent.
The Secretary shall issue such regulations or other guidance as the Secretary determines necessary to carry out the purposes of this subsection, including regulations or other guidance which provides for requirements for recordkeeping or information reporting for purposes of administering the requirements of this subsection.
Not later than December 31, 2022, the Secretary shall issue proposed guidance with respect to the requirements under this subsection.
For purposes of this subtitle, the basis of any property for which a credit is allowable under subsection (a) shall be reduced by the amount of such credit so allowed (determined without regard to subsection (c)).
The amount of any deduction or other credit allowable under this chapter for a vehicle for which a credit is allowable under subsection (a) shall be reduced by the amount of credit allowed under such subsection for such vehicle (determined without regard to subsection (c)).
No credit shall be allowable under subsection (a) with respect to any property referred to in section 50(b)(1).
The Secretary shall, by regulations, provide for recapturing the benefit of any credit allowable under subsection (a) with respect to any property which ceases to be property eligible for such credit.
No credit shall be allowed under subsection (a) for any vehicle if the taxpayer elects to not have this section apply to such vehicle.
A vehicle shall not be considered eligible for a credit under this section unless such vehicle is in compliance with—
the applicable provisions of the Clean Air Act for the applicable make and model year of the vehicle (or applicable air quality provisions of State law in the case of a State which has adopted such provision under a waiver under section 209(b) of the Clean Air Act), and
the motor vehicle safety provisions of sections 30101 through 30169 of title 49, United States Code.
In the case of any vehicle, the credit described in subsection (a) shall only be allowed once with respect to such vehicle, as determined based upon the vehicle identification number of such vehicle, including any vehicle with respect to which the taxpayer elects the application of subsection (g).
No credit shall be allowed under this section with respect to any vehicle unless the taxpayer includes the vehicle identification number of such vehicle on the return of tax for the taxable year.
No credit shall be allowed under subsection (a) for any taxable year if—
the lesser of—
the modified adjusted gross income of the taxpayer for such taxable year, or
the modified adjusted gross income of the taxpayer for the preceding taxable year, exceeds
the threshold amount.
For purposes of subparagraph (A)(ii), the threshold amount shall be—
in the case of a joint return* or a surviving spouse (as defined in section 2(a)), $300,000,
in the case of a head of household (as defined in section 2(b)), $225,000, and
in the case of a taxpayer not described in clause (i) or (ii), $150,000.
For purposes of this paragraph, the term “modified adjusted gross income” means adjusted gross income increased by any amount excluded from gross income under section 911, 931, or 933.
No credit shall be allowed under subsection (a) for a vehicle with a manufacturer’s suggested retail price in excess of the applicable limitation.
For purposes of subparagraph (A), the applicable limitation for each vehicle classification is as follows:
In the case of a van, $80,000.
In the case of a sport utility vehicle, $80,000.
In the case of a pickup truck, $80,000.
In the case of any other vehicle, $55,000.
For purposes of this paragraph, the Secretary shall prescribe such regulations or other guidance as the Secretary determines necessary for determining vehicle classifications using criteria similar to that employed by the Environmental Protection Agency and the Department of the Energy to determine size and class of vehicles.
Subject to such regulations or other guidance as the Secretary determines necessary, if the taxpayer who acquires a new clean vehicle elects the application of this subsection with respect to such vehicle, the credit which would (but for this subsection) be allowed to such taxpayer with respect to such vehicle shall be allowed to the eligible entity specified in such election (and not to such taxpayer).
For purposes of this subsection, the term “eligible entity” means, with respect to the vehicle for which the credit is allowed under subsection (a), the dealer which sold such vehicle to the taxpayer and has—
subject to paragraph (4), registered with the Secretary for purposes of this paragraph, at such time, and in such form and manner, as the Secretary may prescribe,
prior to the election described in paragraph (1) and not later than at the time of such sale, disclosed to the taxpayer purchasing such vehicle—
the manufacturer’s suggested retail price,
the value of the credit allowed and any other incentive available for the purchase of such vehicle, and
the amount provided by the dealer to such taxpayer as a condition of the election described in paragraph (1),
not later than at the time of such sale, made payment to such taxpayer (whether in cash or in the form of a partial payment or down payment for the purchase of such vehicle) in an amount equal to the credit otherwise allowable to such taxpayer, and
with respect to any incentive otherwise available for the purchase of a vehicle for which a credit is allowed under this section, including any incentive in the form of a rebate or discount provided by the dealer or manufacturer, ensured that—
the availability or use of such incentive shall not limit the ability of a taxpayer to make an election described in paragraph (1), and
such election shall not limit the value or use of such incentive.
An election described in paragraph (1) shall be made by the taxpayer not later than the date on which the vehicle for which the credit is allowed under subsection (a) is purchased.
Upon determination by the Secretary that a dealer has failed to comply with the requirements described in paragraph (2), the Secretary may revoke the registration (as described in subparagraph (A) of such paragraph) of such dealer.
With respect to any payment described in paragraph (2)(C), such payment—
shall not be includible in the gross income of the taxpayer, and
with respect to the dealer, shall not be deductible under this title.
In the case of any election under paragraph (1) with respect to any vehicle—
the requirements of paragraphs (1) and (2) of subsection (f) shall apply to the taxpayer who acquired the vehicle in the same manner as if the credit determined under this section with respect to such vehicle were allowed to such taxpayer,
paragraph (6) of such subsection shall not apply, and
the requirement of paragraph (9) of such subsection (f) shall be treated as satisfied if the eligible entity provides the vehicle identification number of such vehicle to the Secretary in such manner as the Secretary may provide.
The Secretary shall establish a program to make advance payments to any eligible entity in an amount equal to the cumulative amount of the credits allowed under subsection (a) with respect to any vehicles sold by such entity for which an election described in paragraph (1) has been made.
Rules similar to the rules of section 6417(d)(6) shall apply for purposes of this paragraph.
For purposes of section 1324 of title 31, United States Code, the payments under subparagraph (A) shall be treated in the same manner as a refund due from a credit provision referred to in subsection (b)(2) of such section.
For purposes of this subsection, the term “dealer” means a person licensed by a State, the District of Columbia, the Commonwealth of Puerto Rico, any other territory or possession of the United States, an Indian tribal government, or any Alaska Native Corporation* (as defined in section 3 of the Alaska Native Claims Settlement Act (43 U.S.C. 1602(m)) 1 to engage in the sale of vehicles.
For purposes of this subsection, the term “Indian tribal government” means the recognized governing body of any Indian or Alaska Native tribe, band, nation, pueblo, village, community, component band, or component reservation, individually identified (including parenthetically) in the list published most recently as of the date of enactment of this subsection pursuant to section 104 of the Federally Recognized Indian Tribe List Act of 1994 (25 U.S.C. 5131).
In the case of any taxpayer who has made an election described in paragraph (1) with respect to a new clean vehicle and received a payment described in paragraph (2)(C) from an eligible entity, if the credit under subsection (a) would otherwise (but for this subsection) not be allowable to such taxpayer pursuant to the application of subsection (f)(10), the tax imposed on such taxpayer under this chapter for the taxable year in which such vehicle was placed in service shall be increased by the amount of the payment received by such taxpayer.
No credit shall be allowed under this section with respect to any vehicle acquired after September 30, 2025.
Source credit: (Added Pub. L. 110–343, div. B, title II, § 205(a), Oct. 3, 2008, 122 Stat. 3835; amended Pub. L. 111–5, div. B, title I, § 1141(a), Feb. 17, 2009, 123 Stat. 326; Pub. L. 111–148, title X, § 10909(b)(2)(H), (c), Mar. 23, 2010, 124 Stat. 1023; Pub. L. 111–312, title I, § 101(b)(1), Dec. 17, 2010, 124 Stat. 3298; Pub. L. 112–240, title I, § 104(c)(2)(I), title IV, § 403(a), (b), Jan. 2, 2013, 126 Stat. 2322, 2337, 2338; Pub. L. 113–295, div. A, title II, § 209(e), Dec. 19, 2014, 128 Stat. 4028; Pub. L. 114–113, div. Q, title I, § 183(a), Dec. 18, 2015, 129 Stat. 3072; Pub. L. 115–123, div. D, title I, § 40405(a), Feb. 9, 2018, 132 Stat. 148; Pub. L. 116–94, div. Q, title I, § 126(a), Dec. 20, 2019, 133 Stat. 3231; Pub. L. 116–260, div. EE, title I, § 144(a), Dec. 27, 2020, 134 Stat. 3054; Pub. L. 117–169, title I, § 13401(a)–(i)(1), Aug. 16, 2022, 136 Stat. 1954–1961; Pub. L. 119–21, title VII, § 70502, July 4, 2025, 139 Stat. 250.)
- 2008Enacted · Pub. L. 110-343 · 122 Stat. 3835
- 2009Amended · Pub. L. 111-5 · 123 Stat. 326
- 2010Amended · Pub. L. 111-148 · 124 Stat. 1023
- 2010Amended · Pub. L. 111-312 · 124 Stat. 3298
- 2013Amended · Pub. L. 112-240 · 126 Stat. 2322, 2337, 2338
- 2014Amended · Pub. L. 113-295 · 128 Stat. 4028
- 2015Amended · Pub. L. 114-113 · 129 Stat. 3072
- 2018Amended · Pub. L. 115-123 · 132 Stat. 148
- 2019Amended · Pub. L. 116-94 · 133 Stat. 3231
- 2020Amended · Pub. L. 116-260 · 134 Stat. 3054
- 2022Amended · Pub. L. 117-169 · 136 Stat. 1954
- 2025Amended · Pub. L. 119-21 · 139 Stat. 250
A history note hasn’t been published yet. The record shows enactment by Pub. L. 110-343 on 2008-10-03.
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