Section 179A Repealed: What Clean Vehicle Credits Remain?
With the Section 179A deduction repealed, understand the shift to current clean vehicle credits and the specific income and vehicle rules that now apply.
The landscape of tax incentives for environmentally friendly vehicles has shifted. Taxpayers searching for the deduction under Internal Revenue Code Section 179A will find it is no longer an active provision. This deduction was officially repealed and is unavailable for any current tax filings. While this specific tax benefit has been phased out, it has been succeeded by a new framework of tax credits designed to encourage the adoption of clean energy transportation.
The Repealed Deduction for Clean Fuel Vehicles
The deduction under Section 179A was a tax incentive for vehicles powered by alternative energy sources like compressed natural gas, liquefied petroleum gas, hydrogen, and electricity. This provision allowed taxpayers to deduct a portion of the cost of qualifying vehicles and related refueling equipment. It also extended to the equipment necessary for refueling these vehicles, like charging stations for electric cars.
For a qualifying clean-fuel vehicle, the deduction was limited based on the vehicle’s type and weight. The law also permitted a separate deduction for the cost of installing clean-fuel refueling property. The repeal of Section 179A means these deductions cannot be claimed on present-day tax returns.
Current Tax Credits for Clean Vehicles
In place of the repealed deduction, Congress has established the Clean Vehicle Credit for qualifying new and previously-owned clean vehicles. To qualify for the new vehicle credit, which can be up to $7,500, a vehicle must meet requirements. These include a manufacturer’s suggested retail price (MSRP) cap of $80,000 for vans, sport utility vehicles, and pickup trucks, and $55,000 for all other vehicles. The vehicle must also undergo its final assembly in North America.
Eligibility for the credit also depends on the taxpayer’s income. For new vehicles, a buyer’s modified adjusted gross income (AGI) cannot exceed $300,000 for married couples filing jointly, $225,000 for heads of households, or $150,000 for all other filers. A separate credit exists for used clean vehicles, offering up to $4,000, with lower MSRP and AGI thresholds. The vehicle’s battery capacity and component sourcing are also factors in the final credit amount for new cars.
How to Claim the Clean Vehicle Credit
The primary document for this process is Form 8936, Clean Vehicle Credits, which must be filed with the taxpayer’s annual federal income tax return, Form 1040. This form is used to calculate the specific credit amount for which the taxpayer is eligible based on the vehicle they purchased.
To complete Form 8936, the taxpayer needs information provided by the seller at the time of purchase. The seller provides a report containing the vehicle identification number (VIN), the vehicle’s MSRP, battery capacity, and confirmation of its final assembly location. Since 2024, a change allows buyers to transfer the credit directly to the dealer at the point of sale, lowering the vehicle’s purchase price immediately.