Qualified Commercial Clean Vehicle Tax Credit
This credit is for businesses and tax-exempt organizations, not individual homeowners. If you operate a business and purchase a qualified electric or plug-in hybrid vehicle for business use, you may claim a credit of up to $7,500 (vehicles under 14,000 pounds) or $40,000 (heavier vehicles like school buses), calculated as the lesser of 30% of the vehicle cost for EVs or 15% for plug-in hybrids, or the Department of Energy's incremental cost analysis. Note: This credit is no longer available for vehicles acquired after September 30, 2025.
Fleet operators and commercial vehicle providers can offer customers information about this tax credit, which applies to qualified electric and plug-in hybrid commercial vehicles purchased for business use. The credit is worth up to $7,500 or $40,000 depending on vehicle weight, calculated as the smallest of three factors: a percentage of basis (30% for EVs, 15% for PHEVs), a fixed maximum, or DOE's incremental cost. Vehicles must meet GVWR and battery capacity requirements (7 kWh for vehicles under 14,000 pounds; 15 kWh for heavier mobile machinery), be from a qualified manufacturer, and be intended for business use in the United States. The credit expires for vehicles acquired after September 30, 2025.
The Qualified Commercial Clean Vehicle Credit under IRC Section 45W provides nonrefundable tax credits to businesses and tax-exempt entities (nonprofits, state/local governments, tribal governments, rural electric cooperatives, and Alaska Native Corporations) that place qualified electric or plug-in hybrid vehicles in service for business purposes. Credit amounts range from $7,500 to $40,000 based on GVWR and vehicle type, calculated as the lesser of percentage-of-basis, fixed maximums, or DOE incremental cost analysis. Tax-exempt entities may use the direct-pay option to monetize credits as refunds, and eligible taxpayers may transfer credits to unrelated parties (one transfer only, reported to IRS by tax filing deadline). The program terminates for vehicles acquired after September 30, 2025, with acquisition demonstrated through binding written contracts and payment made by that date.
Program details
- Program ID
- 22473
- Effective
- 1/1/2023
- Expires
- 9/30/2025Expired
- Last updated
- 7/25/2025
Eligibility
- Sectors
- commercial industrial local government nonprofit cooperative utilities state government tribal government
- Technologies
- passenger electric vehicles plug-in electric hybrid vehicles heavy-duty electric vehicles off-road electric vehicles electric school buses electric transit buses
Program summary
Note: Section 70503 of The One Big Beautiful Bill (OBBB) repealed this tax credit for equipment placed in service after September 30, 2025.
Section 13403 of The Inflation Reduction Act of 2022 (H.R. 5376) established a tax credit for qualified commercial clean vehicles purchased on or after January 1, 2023. To qualify, the vehicle must have a gross vehicle weight rating of less than 14,000 pounds and have a battery rating of not less than 7 kilowatt hours. Mobile machinery, as defined in section 4053(8) (including vehicles that are not designed to perform a function of transporting a load over the public highways) can exceed the 14,000 pound weight limit, but must have a battery capacity of not less than 15 kilowatt hours.
The tax credit is worth the lesser of:
- 30% of the cost for an all-electric vehicle, and 15% for a plug-in hybrid electric vehicle;
- $7,500 for vehicles that are less than 14,000 pounds (typically cars, vans, trucks, and similar passenger-sized vehicles), and $40,000 for vehicles that are 14,000 pounds or more (typically larger vehicles like school buses and semi-trucks);
- or the Department of Energy's incremental cost analysis for the appropriate class of vehicle
Section 13801 of The Inflation Reduction Act of 2022 also established procedures for other parties to monetize certain tax credits, including this one, for equipment placed in service on or after January 1, 2023 and through December 31, 2032, later reduced to September 30, 2025.
The direct pay option allows non-taxable entities to directly monetize certain tax credits. The provisions apply to nonprofits, a state or political subdivision thereof, the Tennessee Valley Authority, Indian tribal governments (as defined in Section 30D(g)(9)), any Alaska Native Corporation (as defined in Section 3 of the Alaska Native Claims Settlement Act), or any corporation operating on a cooperative basis which is engaged in furnishing electric energy to persons in rural areas. Such applicable entities can elect to be treated as having made a tax payment equal to the value of the tax credit they would otherwise be eligible to claim. The entity can then claim a refund for the excess taxes they are deemed to have paid. The option effectively makes this tax credit refundable for these entities.
The act also allows eligible taxpayers to transfer all or a portion of their eligible tax credits to an unrelated taxpayer. Transfers must be reported to IRS and only one transfer is permitted. Must be elected no later than the due date for tax filing for the tax year the tax credit is claimed.
Contact & resources
- Additional resources
Please verify current program details with the administering agency before making any financial decisions.
