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Just So You Know! Government Incentives Are Underwriting the Electric Trucks Industry


Government incentives are accelerating the adoption of electric vehicles into fleets across the nation.

The U.S. federal government's Inflation Reduction Act (IRA) is providing up to $40,000 per vehicle in tax incentives to buyers or lessors of commercial electric vehicles; either 30% of the original purchase price of the vehicle minus the credit, or the price difference between the electric vehicle and an equivalent gas or diesel vehicle.

This incentive is valid from Jan. 1, 2023 through Dec. 31, 2032 with no limit on the number of vehicles sold or amount of money disbursed through this incentive. Additionally, state and local zero-emissions grants introduce substantially more cost savings directly to customers. For example, California's Hybrid and Zero-Emissions Truck and Bus Voucher Incentive Project (HVIP) provides buyers with approximately $30,000 - $85,000 worth of grants to purchase clean vehicles.

>Businesses and tax-exempt organizations that buy a qualified commercial clean vehicle may qualify for a clean vehicle tax credit of up to $40,000 under Internal Revenue Code (IRC) 45W. The credit equals the lesser of:

  • 15% of your basis in the vehicle (30% if the vehicle is not powered by gas or diesel)
  • The incremental cost of the vehicle

The maximum credit is $7,500 for qualified vehicles with gross vehicle weight ratings (GVWRs) of under 14,000 pounds and $40,000 for all other vehicles.

Who qualifies

Businesses and tax-exempt organizations qualify for the credit.

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. A 45W credit can be carried over as a general business credit.

Vehicles that qualify

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.

The vehicle must also:

  • Be made by a qualified manufacturer as defined in IRC 30D(d)(1)(C). See our index of qualified manufacturers
  • 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).

How to claim the credit

Partnerships and S corporations must file Form 8936, Clean Vehicle Credits.

All other taxpayers are not required to complete Form 8936 if their only source for this credit is a partnership or S corporation. Instead, they can report this credit directly on line 1aa in Part III of Form 3800, General Business Credit.