New Qualified Plug-In Electric Drive Motor Vehicle Credit

Post Date: 5/7/21
Last Updated: 5/10/21


Cross References
- IRC ยง30D

Taxpayers are allowed to claim a tax credit for placing into service a new qualified plug-in electric drive motor vehicle during the tax year. The credit applies to new electric passenger vehicles and new electric light trucks (gross vehicle weight under 14,000 pounds). The credit is allowed for both business use vehicles and personal use vehicles. A "new" qualified plug-in electric drive motor vehicle means the original use commences with the taxpayer.

For vehicles acquired after 12/31/2009, the credit is equal to $2,500 plus, for a vehicle which draws propulsion energy from a battery with at least 5 kilowatt hours of capacity, $417, plus an additional $417 for each kilowatt hour of battery capacity in excess of 5 kilowatt hours. The total amount of the credit allowed for a vehicle is limited to $7,500.

The credit begins to phase out for a manufacturer's vehicles when at least 200,000 qualifying vehicles manufactured by that manufacturer have been sold for use in the United States (determined on a cumulative basis for sales after December 31, 2009). Taxpayers may claim the full amount of the credit up to the end of the first quarter after the quarter in which the manufacturer records its sale of the 200,000th qualified vehicle. For the second and third calendar quarters, taxpayers may claim 50% of the credit. For the fourth and fifth calendar quarters, taxpayers may claim 25% of the credit. No credit is allowed after the fifth quarter.

See printable version for chart and remainder of article.
Return to Tax Industry News
© Tax Materials, Inc. 2021