How to Fill Out Form 8936 for the Clean Vehicle Credit

The Internal Revenue Service (IRS) Form 8936, “Clean Vehicle Credits,” is used by taxpayers to calculate and claim credits for qualifying clean vehicles placed into service during the tax year. The form pertains to the Clean Vehicle Credit, established under Internal Revenue Code (IRC) Section 30D, and the Used Clean Vehicle Credit, under IRC Section 25E.

Understanding Eligibility for the Clean Vehicle Credit

To claim the Clean Vehicle Credit, both the vehicle and the buyer must meet established criteria. New clean vehicles may qualify for a credit of up to $7,500, while previously owned clean vehicles may qualify for up to $4,000.

New clean vehicles require a battery capacity of at least 7 kilowatt-hours and a gross vehicle weight rating of less than 14,000 pounds. Final assembly must occur in North America. The manufacturer’s suggested retail price (MSRP) cannot exceed $80,000 for vans, sport utility vehicles, and pickup trucks, or $55,000 for other vehicle types. The credit amount can be split into two $3,750 components, contingent on meeting critical mineral and battery component sourcing requirements.

Previously owned clean vehicles, under IRC Section 25E, must have a sale price of $25,000 or less and be at least two model years older than the calendar year of purchase. The sale must occur through an IRS-registered dealer, and the vehicle cannot have been previously transferred to a qualified buyer after August 16, 2022.

Buyer income limitations apply to both new and previously owned clean vehicle credits. For new clean vehicles, the modified adjusted gross income (MAGI) cannot exceed $300,000 for married couples filing jointly, $225,000 for heads of household, or $150,000 for all other filers. For previously owned clean vehicles, the MAGI limits are lower: $150,000 for married filing jointly, $112,500 for heads of household, and $75,000 for all other filers. Taxpayers can use their MAGI from either the current tax year or the preceding year, choosing the lesser of the two to qualify.

Gathering Information for Form 8936

The Vehicle Identification Number (VIN) is required and found on the vehicle or purchase agreement.

The date the vehicle was “placed in service” refers to the date of purchase or delivery, recorded on the purchase agreement. You will need seller information, including their name, address, and Taxpayer Identification Number (TIN) or Employer Identification Number (EIN). For vehicles purchased in 2024 or later, registered dealers must submit reports to the IRS through the IRS Energy Credits Online system and provide the buyer with a copy of this accepted seller report. This report, the “Clean Vehicle Seller Report,” confirms eligibility and the maximum credit.

The original purchase price of the vehicle, found on the purchase agreement, is also needed. If the dealer provided a specific credit amount or related documentation at the time of sale, have this information ready. Form 8936 and its instructions can be downloaded from the IRS website.

Completing Form 8936 – Step-by-Step

Form 8936 is divided into parts, each requiring details about the clean vehicle and the credit calculation. Part I focuses on the vehicle’s information and the initial credit determination.

Part I requires accurate transcription of the VIN and seller information from your purchase documents and the dealer’s report, as discrepancies can lead to delays or rejection of the credit.

Part II of Form 8936 addresses credit limitations based on your tax liability. The calculated credit from Part I may be limited by the amount of tax you owe. This section guides you in determining the allowable credit that can be claimed against your tax liability. For some taxpayers who opted to transfer the credit to the dealer at the point of sale, this section reconciles the advance payment received with the actual credit allowed.

Part III deals with credit recapture scenarios. This section is used if circumstances require an adjustment to a previously claimed credit, such as the vehicle being resold within a short period. A vehicle purchased for resale is not eligible for the credit, and reselling within 30 days of possession can trigger recapture rules.

Submitting Form 8936 with Your Tax Return

Form 8936 must be submitted as part of your annual federal income tax return. This form is not filed independently but is attached to your primary tax return, such as Form 1040. The submission process varies by filing method.

For electronic filing, most tax preparation software integrates Form 8936 directly into the return. The software handles attachment and transmission of all required forms to the IRS. If you are using a tax professional, they will manage the electronic submission process on your behalf, ensuring all forms are correctly included.

If you choose to file your tax return by mail, attach Form 8936 to your Form 1040 or other relevant tax return. The IRS provides specific instructions on the order in which forms and schedules should be assembled within the paper return package. Place Form 8936 behind your main tax form. Maintain thorough records, keeping copies of your completed Form 8936, the dealer’s clean vehicle seller report, your purchase agreement, and any other supporting documentation for your personal files. This provides a clear audit trail for future reference.