Electric vehicle (EV) buyers seeking to claim a Clean Car Tax Credit must ensure their purchase complies with new requirements set forth by the new Inflation Reduction Act (IRA), which was signed into law on August 16, 2022 and is due to go into effect January 1, 2023.

Between August 16, 2022 and December 31, 2022, buyers can still claim a tax credit on their purchased EV as long as the vehicle's final assembly was in North America.

After January 1, 2023, the following requirements will apply for new EVs and used EVs:

New Vehicles: Buyers of new vehicles can claim up to $7,500 in tax credits as long as the vehicle's final assembly occurred in North America, at least 40% of the vehicle's critical mineral materials (such as lithium) were sourced or processed in the United States or countries with US free-trade agreements, and at least 50% of the vehicle's battery components were manufactured or assembled in North America.

To determine the manufacture location for your vehicle, please use the vehicle identification number (VIN) decoder tool presented by the National Highway Traffic Safety Administration (NHTSA). Full instructions are available on the VIN decoder webpage.

The critical mineral requirement and the battery component requirements are each worth $3,750 in tax credit, and satisfying both can make you eligible to claim $7,500. Please note that the percentage value of materials sourced in North America for both of these requirements will increase yearly—to learn more, check out the Alternative Fuels Data Center.

 Light commercial vehicles must have a manufacturer's suggested retail price (MSRP) of less than or equal to $55,000 to qualify for a tax credit. Trucks, vans, and SUVs must have an MSRP of less than or equal to $80,000 to qualify. New vehicle buyers' qualifications include earning less than $300,000 for joint return tax filers, $225,00 for head-of-household filers, and $150,000 for individual return filers.

Used Vehicles:  Buyers of used vehicles can claim equal to 30 percent of the vehicle's price (though this may not exceed $4,000) as long as their vehicle costs less than $25,000, is at least two years old at the time of purchase, and is purchased by an individual (not a business/organization). The buyer must earn less than $150,000 for joint return filers, $112,500 for head-of-household filers, and $75,000 for individual return filers. 

For vehicle producers, there will no longer be a cap on sales for car manufacturers, allowing Tesla and General Motors, who previously hit the 200,000 sales threshold in 2018, to produce cars that qualify now. For more information, check out these articles on Forbes and the Alternative Fuels Data Center.