IRS Released Guidance On Clean Vehicle Credits Under The Inflation Reduction Act

IRS Released Guidance On Clean Vehicle Credits Under The Inflation Reduction Act

IRS Released Guidance On Clean Vehicle Credits Under The Inflation Reduction Act

  • Posted by admin
  • On February 24, 2023
  • 0 Comments
  • Kavit Sanghvi, Shishir Lagu

By

Shishir Lagu
Equity Partner - US Tax

Kavit Sanghvi
Partner

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IRS Released Guidance On Clean Vehicle Credits Under The Inflation Reduction Act

Under the Inflation Reduction Act, the IRS issued several guidelines about the new clean vehicle credits that will be implemented or updated in 2022. The IRC Sections 30D (clean cars), 45W (clean commercial vehicles), and 25E (clean energy) credits are a few of the credits that are mentioned in the direction (previously owned clean vehicles). The general rule is that beginning in 2023, this advice will apply to all sold and bought automobiles.

In this guidance, various issues with the new and amended credits have been clarified. Further guidance for unresolved problems, such as the crucial mineral and battery components, is anxiously awaited by taxpayers. In addition, taxpayers must be able to rely on the manufacturer/reporting seller’s certification to be eligible for the tax credit. End users have more access to these incentives because makers and vendors must now provide this documentation.

The guidance also outlines the methodology for calculating incremental costs. The final finding establishes that the cumulative cost restriction in IRC Section 45W will not restrict credit availability for street vehicles (other than small car PHEVs) placed in service in the calendar year 2023 and has a gross vehicle weight rating under 14,000 pounds.

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