As of January 1, 2024, customers will be able to transfer their federal new and used clean vehicle tax credits to dealerships registered through the Energy Credits Online (ECO) portal at the time of sale. Moreover, as of January 1, all dealers (regardless of whether the customer elects to transfer credits or not) must submit time of sale reports for clean vehicle transactions through the ECO portal. Dealers must be registered with the ECO portal in order to submit the time of sales reports.

Seller Reports are also necessary for clean vehicle sales involving certain credits (Sections 30D and 25E (used) credits) and must be provided to both buyers and the IRS at the time of sale.

If you are unsure what to do, there are abundant resources. The IRS issued a new User Guide in late December, with step-by-step instructions explaining how to create time of sale reports for clean vehicle sales in the ECO portal. The IRS also issued updated dealer registration FAQs, important background information for consumers about transferring clean vehicle tax credits, and a checklist of information buyers must provide to eligible dealers for clean vehicle sales involving the transfer of credits. The above-mentioned resources can be found via the QR codes at the end of this article.

Background on Credits for New Clean Vehicles Purchased In 2023 (Or After)

Consumers may qualify for a clean vehicle tax credit of up to $7,500 under Internal Revenue Code Section 30D if they buy a new, qualified plug-in EV. In order to qualify, the customer must buy the qualifying vehicle for their own use (not for resale) and use the vehicle primarily in the U.S.

In addition, the customer’s modified adjusted gross income (AGI) may not exceed $300,000 for married couples filing jointly, $225,000 for heads of households, or $150,000 for all other filers, and customers can use their modified AGI from the year they take delivery of the vehicle or the year before, whichever is less.

The credit is nonrefundable, so consumers can’t get back more on the credit than they owe in taxes, and they can’t apply any excess credit to future tax years. The amount of the credit depends on when the customer takes delivery (vehicle was placed in service), regardless of purchase date.

For vehicles placed in service between January 1 and April 17, 2023:
Customers are eligible for a base amount of $2,500 base amount, plug $417 for a vehicle with at least 7 kilowatt hours of battery capacity and another $417 for each kilowatt hour of battery capacity beyond 5 kilowatt hours, up to a maximum of $7,500.

For vehicles placed in service April 18, 2023, and after:
Vehicles will have to meet all of the same criteria, plus meet new critical mineral and battery component requirements for a credit up to:

• $3,750 if the vehicle meets the critical minerals requirement only.
• $3,750 if the vehicle meets the battery components requirement only.
• $7,500 if the vehicle meets both.

A vehicle that doesn’t meet either requirement will not be eligible for a credit.

How To Determine What Electric Vehicles Qualify

In order to be eligible for the clean vehicle tax credit, the vehicle’s manufacturer suggested retail price (MSRP) cannot exceed $80,000 for vans, sport utility vehicles and pickup trucks or $55,000 for all other vehicles.

There are a wide variety of additional factors (e.g., manufacturer, where vehicle’s final assembly occurred, critical mineral and battery component requirements, battery capacity, gross vehicle weight, etc.) that impact vehicle eligibility.

Dealers can find a specific vehicle’s weight, battery capacity, final assembly location (listed as “final assembly point”) and VIN on the vehicle’s window sticker and use this information to search fueleconomy.gov to determine if that specific vehicle is eligible for the new clean vehicle credit.

Please call NJ CAR headquarters at (609) 883-5056 if you have any questions regarding the clean vehicle tax credit.