Tax Credit for Buying a Commercial Clean Vehicle

If your business buys a clean vehicle which is subject to depreciation, it can take a tax credit of 15% of the basis or the vehicle’s “incremental cost.” The credit is capped at $7,500 for cars and light-duty trucks weighing less than 14,000 pounds or $40,000 for all other vehicles (e.g., electric semi-trucks). Proposed regulations (U.S. Department of the Treasury Releases Proposed Rules for Qualified Commercial Clean Vehicles | U.S. Department of the Treasury) define “incremental cost.” It’s what a manufacturer’s written cost determination says it is. Alternatively, you may calculate the incremental cost of a qualifying clean vehicle versus an internal combustion engine (ICE) vehicle based on the differing costs of the vehicle powertrains. #IdeaoftheDay