What vehicles qualify for the Electrical Motor Vehicle Credit (Form 8936)?
If you purchased a new, qualified plug-in electric drive vehicle during the tax year, you may be eligible to claim a tax credit by filing Form 8936, Qualified Plug-In Electric Drive Motor Vehicle Credit with your tax return. In some cases, the credit can be claimed as a general business credit on Form 3800.
You can claim the credit for two different types of vehicles:
- Qualified plug-in electric motor vehicles with at least four wheels
- Qualified two-wheeled plug-in electric vehicles that can achieve a speed of at least 45 miles per hour
The IRS further defines qualified plug-in electric vehicles with at least four wheels as those that are “propelled to a significant extent by an electric motor that draws electricity from a battery that has a capacity of not less than four kilowatt hours and is capable of being recharged from an external source of electricity, and [have] a gross vehicle weight of less than 14,000 pounds.”
Like their 4-wheeled counterparts, the maximum weight for qualified two-wheeled plug-in electric vehicles is 14,000 pounds, but the battery capacity for these vehicles can be as low as 2.5 kilowatt hours.
You must be the owner of the qualified vehicle in order to claim the credit. For leased vehicles, only the owner of the vehicle, not the lessee, can claim the credit. In addition, the vehicle must be:
- Purchased new. Used vehicles do not qualify.
- Bought to use or to lease, not to resell.
- Primarily driven in the U.S.
- Manufactured primarily for use on public streets, roads and highways (e.g., not as a toy, an agricultural vehicle or primarily for use on unpaved surfaces)
The vehicle’s manufacturer or distributor can tell you which make, model and model year of the specified vehicle qualifies for the credit and how much credit that particular model is entitled to claim. (You can request a copy of the IRS certification letter that indicates which vehicles are eligible for the credit.)
Be aware that the rules for this credit change frequently, as does the list of specific vehicle makes, models and model years that qualify for the credit. If the rules change on or after the date you acquire the vehicle, you can still claim the credit even if you had not yet placed the vehicle into service.
What are the qualifications for the Alternative Motor Vehicle Credit (Form 8910)?
If you bought a vehicle that runs on an alternative fuel source, you may be eligible to claim a valuable federal tax credit in addition to any credits or incentives offered by your state. Use Form 8910, Alternative Motor Vehicle Credit to claim the credit if you are eligible. Only a few specific vehicles and situations qualify for this credit though, so it’s important to verify that your vehicle meets all the requirements before you plan on capturing these tax savings.
Your vehicle must have four wheels and be considered a qualified fuel cell vehicle by the IRS to qualify for the Alternative Motor Vehicle Credit. It must also be certified as one of the specific makes, models and model years that are eligible for the credit. The vehicle’s manufacturer or distributor can confirm whether your vehicle is certified and, if so, the amount of the federal tax credit that the vehicle qualifies for.
In addition to the vehicle’s certifications, you must meet certain tests before you can claim the Alternative Motor Vehicle Credit:
- You must own the vehicle. If you lease a qualified fuel cell vehicle you cannot claim the credit, but the lessor can. Only the owner is eligible.
- You must have purchased the vehicle new, as the original owner. Used vehicles are not eligible for the credit.
- You must have placed the vehicle into service during the tax year for which you are claiming the credit.
- You must use the vehicle exclusively or mostly in the United States.
- You must not have purchased the vehicle with the intention of selling it, but for your own personal use or as a vehicle you lease to others.
If you and the vehicle meet all the requirements, you can claim the Alternative Motor Vehicle Credit for a vehicle that is limited to personal use and for vehicles that are partly or exclusively used for business. Form 8910 will help you figure the amount of the credit that applies to your personal and/or business tax returns, respectively.
Rule changes for the Alternative Motor Vehicle Credit
Regulations and requirements related to the Alternative Motor Vehicle Credit change often. As long as you purchase a qualified vehicle on or before the day of an IRS announcement withdrawing certification for that particular make, model or model year, you are eligible to claim the credit. Any vehicle that you purchase after the date of such an announcement will not be eligible to receive the credit.
Note: You cannot claim the Qualified Plug-In Electric Drive Motor Vehicle Credit (Form 8936) and the Alternative Motor Vehicle Credit (Form 8910) for the same vehicle.