Credit of Previously-owned Clean Vehicles
If you are in the market for a new to you clean vehicle this may be of interest to you and help you reduce your taxes.
With the passing of the Inflation Reduction Act of 2022 on August 16, 2022, there is a new tax credit available for the purchase of a previously owned clean vehicle. The credit is the lesser of $4,000 or 30% of vehicle’s sale price. There are a few more hoops that you need to jump through to qualify for the tax credit.
A previously owned clean vehicle is a motor vehicle with a model year which is at least two calendar years earlier than the calendar year in which you are purchasing the vehicle. The vehicle will need to generally meet the requirements appliable to vehicles eligible for the clean air vehicle credit for new vehicles or is a clean fuel-cell vehicle with a gross weight rating of less than 14,000 pounds.
The vehicle must be purchased in a “qualified sale”. A qualified sale is the sale of a motor vehicle by a dealer for a price of $25,000 or less, which is the first transfer since the Inflation Reduction Act’s enactment to a qualified buyer other than the original buyer of the vehicle.
A qualified buyer is:
- An individual who purchases the vehicle for use and not resale.
- Who is not a dependent of another taxpayer.
- Has not been allowed a credit for a previously owned clean vehicle during the three-year period ending on the sale date.
- Who has modified adjusted gross income of:
- Married filing joint, or surviving spouse, not exceeding $150,000
- Head of household, not exceeding $112,500
- Single, not exceeding $75,000
The effective date for this credit is for any vehicle acquired after December 31, 2022 and not after December 31, 2032.
Here is a link for our article on the new clean air vehicle tax credit: https://www.whittakercpas.com/new-clean-air-vehicle-credit/