Credit for Qualified Commercial Clean Vehicles 45W for organizations

What qualifies

The 45W tax credit is for businesses and tax-exempt organizations to purchase qualified commercial clean vehicles. You may use this credit on as many qualified vehicles as you purchase (there is no cap).

In addition, eligible vehicles must either be:

  • A plug-in electric vehicle with a battery capacity of:
    • 7 kilowatt hours if the gross vehicle weight rating (GVWR) is under 14,000 pounds
    • 15 kilowatt hours if the GVWR is 14,000 pounds or more
  • A fuel cell motor vehicle that satisfies the requirements of IRC 30B(b)(3)(A) and (B).

Eligible vehicles must be:

  • Manufactured primarily for use on public roads or mobile machinery as defined in IRC 4053(8)
  • Made by a qualified manufacturer
  • For use in your business, not for resale
  • Not have been allowed a credit under sections 30D or 45W
  • Be for use primarily in the United States

Incentive value

The credit is the lesser of 15% of the vehicle’s basis (30% if the vehicle is not powered by gas or diesel) or the incremental cost of the vehicle. The credit is capped at $7,500 for vehicles with a gross vehicle weight rating (GVWR) under 14,000 pounds and $40,000 for all other vehicles.

Credits are nonrefundable. Credits may be carried over as a general business credit but cannot exceed the taxes owed. There is no limit on the number of credits a business can claim.

Direct pay is available for tax-exempt organizations.

Who is eligible

Businesses and tax-exempt organizations.

When the credit is available

For qualified purchases from January 1, 2023, to January 1, 2033.

How to claim the credit

Partnerships and S corporations must file Form 8936, Clean Vehicle Credits. All other taxpayers can report this credit directly on line “1aa” in Part III of Form 3800, General Business Credit

Tax exempt entities should follow the instructions for direct pay. Preregister with the IRS and submit annual tax paperwork, typically a Form 990-T for most entities that don’t normally file a tax return.

Visit the federal website here for more details on what qualifies and how to use the credit.

Disclaimer: None of the information presented on this website should be considered official legal or financial advice. Please contact a licensed tax professional for additional information.