45W: Credit for Qualified Commercial Clean Vehicles

Federal Agency

Sub-Department

Internal Revenue Service (IRS)

Purpose

To provide a tax credit for businesses and tax-exempt organizations that buy a qualified commercial clean vehicle.

Applicant and/or Project Eligibility Requirements

Credit for light, medium, and heavy-duty EVs purchased for commercial use or lease. To qualify, a vehicle must be subject to a depreciation allowance, with an exception for vehicles placed in service by a tax-exempt organization and not subject to a lease. For additional requirements, see "Other Notes"

Decarbonization Considerations

This tax credit can be utilized by non-profit entities like municipalities that are working on fleet electrification. There is no limit on the number of credits your business can claim. For businesses, the credits are nonrefundable, so you can't get back more on the credit than you owe in taxes. Local governments and Tribal communities can also highlight this tax credit for local businesses, landlords, and residents to encourage the private sector deployment of refueling and recharging infrastructure.

Equity Considerations

See the "Equity Design Considerations for Federal Funding" for general considerations and additional sector-based resources: https://cityrenewables.org/resources/equity-design-considerations-for-federal-funding/

Helpful Tips

Tax-exempt entities can leverage these credits through a new mechanism known as "elective" or "direct" pay. To learn more about how these tax credits work for entities with and without tax liability, check out our Funding Guidance here: https://cityrenewables.org/funding-guidance/understanding-available-incentives/tax-credits-for-renewable-energy/

Other Notes

The vehicle must also: Be made by a qualified manufacturer as defined in IRC 30D(d)(1)(C); Be for use in your business, not for resale; Be for use primarily in the United States; Not have been allowed a credit under sections 30D or 45W. In addition, the vehicle must either be: Treated as a motor vehicle for purposes of title II of the Clean Air Act and manufactured primarily for use on public roads (not including a vehicle operated exclusively on a rail or rails); or mobile machinery as defined in IRC 4053(8) (including vehicles that are not designed to perform a function of transporting a load over a public highway). The vehicle or machinery must also either be a plug-in electric vehicle that draws significant propulsion from an electric motor with a battery capacity of at least: 7 kilowatt hours if the gross vehicle weight rating (GVWR) is under 14,000 pounds (15 kilowatt hours if the GVWR is 14,000 pounds or more); or a fuel cell motor vehicle that satisfies the requirements of IRC 30B(b)(3)(A) and (B).