Incentives

What is it?

The Clean Vehicle Tax Credit (formerly the Plug-in Electric Drive Credit) offers a tax credit of up to $7,500 for purchasing a new electric vehicle (EV) or fuel cell electric vehicle (FCEV).

• New in 2023: Vehicles must have final assembly in North America to qualify.
• Credit is split into two parts:
  • $3,750 for meeting critical mineral sourcing requirements.
  • $3,750 for meeting battery component manufacturing requirements.
• Starting January 1, 2024, eligible buyers can apply the tax credit at the dealership, reducing the upfront cost instead of waiting for a tax refund.

Who Qualifies?

• Individuals purchasing a new EV or FCEV for personal use.
• Vehicles must be assembled in North America (Check eligibility with FuelEconomy.gov).
• Buyers’ income must be below these limits:
  • $300,000 (Married filing jointly)
  • $225,000 (Head of household)
  • $150,000 (Single filers)

Eligibility Requirements

Vehicle Price Limits

• SUVs, Vans, Pickup Trucks: MSRP must be $80,000 or less
• All Other Vehicles: MSRP must be $55,000 or less
• Where to check MSRP: Look at the Monroney label (window sticker) – the destination fee and dealer add-ons are NOT included in the price limit.

Battery and Mineral Sourcing Requirements

To qualify for all or part of the $7,500 credit, vehicles must meet:

• Critical Minerals Requirement: A percentage of the battery’s minerals must be sourced from the U.S. or free-trade partners.
  • 2023: 40%
  • 2024: 50%
  • 2025: 60%
  • 2026: 70%
  • 2027 and beyond: 80%
• Battery Component Requirement: A percentage of battery components must be assembled in North America.
  • 2023: 50%
  • 2024: 50%
  • 2025: 60%
  • 2026: 70%
  • 2027 and Beyond: 80%

Special Rules for Previously Purchased Vehicles

Vehicles Placed in Service on or After April 18, 2023

• Vehicles must meet battery and mineral sourcing requirements to qualify.
• Maximum credit amount depends on whether the vehicle meets:
  • Critical minerals requirements: $3,750
  • Battery components requirement: $3,750
  • Both requirements: Full $7,500

Vehicles Sold on or After January 1, 2023, and Placed in Service Before April 18, 2023

• Must have been assembled in North America.
• Credit = Base amount of $2,500 + $417 per kWh over 5 kWh (max $7,500).
• No battery sourcing requirements applied yet.

Vehicles Purchased Between August 17, 2022 – December 31, 2022

• Must have final assembly in North America.
• Manufacturer sales caps still applied.

Vehicles Purchased Before August 17, 2022

• Eligible for previous tax credit structure.
• Credit = Base $2,500 + $417 per kWh over 5 kWh (up to $7,500).
• Manufacturer sales cap applied – some brands (e.g., Tesla, GM) were phased out.
• If the buyer had a binding purchase contract before August 16, 2022, they may still qualify under old rules.

How to Apply

1. Check Vehicle and Income Eligibility:
   1. Use the IRS Clean Vehicle Credit Guide
   2. Confirm vehicle assembly location on FuelEconomy.gov
2. Claiming the Credit:
   1. Before 2024: File IRS Form 8936 with your tax return.
   2. Starting 2024: The credit can be applied at the dealership, lowering the upfront cost of your EV.
3. Keep Records:
   1. Hold onto purchase documents and window stickers for tax purposes.
   2. Confirm your dealer submits the credit claim correctly to the IRS.

Helpful Resources

• IRS Clean Vehicle Credit Info
• IRS Federal Register Guidance
• FuelEconomy.gov Federal Tax Credit List
• VIN Decoder (to confirm assembly)
• IRS Form 8936
• IRS Energy Credits Online (for dealerships)

What is it?

The Pre-Owned Clean Vehicle Credit is a federal benefit that provides up to $4,000 in tax credits for individuals purchasing a used electric vehicle (EV) or fuel cell electric vehicle (FCEV).

Who Qualifies?

• Individuals purchasing a used EV or FCEV for personal use.
• Income must be below these limits:
  • $150,000 (Married filing jointly)
  • $112,000 (Head of household)
  • $75,000 (Single filers)

Only one credit may be claimed per vehicle – multiple buyers cannot claim the same car.

Individuals may only claim this credit once every three years.

Eligibility Requirements

• Vehicle Age Requirement: The EV or FCEV must be at least two model years old at the time of purchase.
  • Example: A car purchased in 2024 must be a 2022 model year or older.
• The purchase price must not exceed $25,000.
• The vehicle must be purchased from a licensed dealer (private party sales do not qualify).
• The tax credit only applies to the first resale of a qualifying used EV.

How to Apply

1. Confirm Vehicle and Income Eligibility
   1. Check the model year and purchase price to ensure compliance.
   2. Verify your income eligibility based on IRS guidelines.
2. Purchase from a Licensed Dealer
   1. Upon purchase, ensure that the dealership provides proper documentation of the sale. Find more information on required dealer information here..
3. Claim the Credit on Your Tax Return
   1. File IRS Form 8936 when submitting your tax return.
   2. Retain all purchase records in case of IRS verification.

Helpful Resources

• IRS Used Clean Vehicle Credit
• FuelEconomy.gov Used EV Credit List
• Download IRS Form 8936

What is it?

A first-come, first-served excise tax credit for businesses and individuals.

Who Qualifies?

Businesses and individuals who purchase an EV or FCEV.

Eligibility Requirements

• Base purchase price must not exceed $50,000.
• Must be propelled to a significant extent by an electric motor.
• Battery must have at least 4 kilowatt-hours.
• Cannot be modified from original manufacture specifications.
• Must be purchased and titled between July 1, 2023, and June 30, 2027.
• Available for 1 vehicle per individual, and up to 10 vehicles per business entity.

How to Apply

Apply at the Motor Vehicle Administration website.

Helpful Resources

• Maryland Statutes, Transportation Code 13-815
• House Bill 1391, 2022