IRS Issues Proposed New Clean Vehicle Credit Regulations

On April 17, 2023, the Internal Revenue Service (IRS) published proposed regulations detailing the requirements taxpayers must meet to qualify for a tax credit related to each new clean vehicle purchased and placed into service. The proposed rules reflect several amendments to Section 30D of the Internal Revenue Code pursuant to the Inflation Reduction Act of 2022. Those amendments include critical minerals and battery components requirements aimed at moving electric vehicle supply chains to North America.

Section 30D allows a maximum credit of $7,500 per new clean vehicle, consisting of $3,750 for vehicles meeting the critical minerals requirement and $3,750 for vehicles meeting the battery components requirement. New clean vehicles placed in service after April 17, 2023, are subject to the critical mineral and battery component requirements. This statutory deadline applies even if the vehicle was ordered or purchased on or before April 17, 2023.

The proposed rules identify two types of affected business entities: (1) qualified manufacturers and (2) businesses that purchase and use new clean vehicles. IRS has certified that the rules will not have a significant economic impact on a substantial number of small entities.

Comments are due June 16, 2023.

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