IRS Announces Reliance on DOE Analysis for Vehicle Credit

IRS issues guidance on the incremental cost for the Commercial Clean Vehicle Credit

Dec. 20, 2023

WASHINGTON — The Treasury Department and Internal Revenue Service today issued Notice 2024-05 regarding the commercial clean vehicle credit for commercial vehicles placed in service in 2024.

The guidance provides a safe harbor for certain qualified commercial clean vehicles placed in service in calendar year 2024, which allows for reliance on the Department of Energy (“DOE”) analysis of incremental costs. The analysis shows that the incremental cost of all street electric vehicles (other than in the case of compact car PHEVs) that have a gross vehicle weight rating of less than 14,000 pounds will be greater than $7,500 in calendar year 2024.

Accordingly, the incremental cost will not limit the available credit amount for street electric vehicles that have a gross vehicle weight rating of less than 14,000 pounds and are placed in service in calendar year 2024.

For compact car plug-in electric hybrids placed in service during calendar year 2024, for which the incremental cost was calculated to be less than $7,500, the IRS will accept a taxpayer's use, when calculating the credit amount, of the incremental cost published by the DOE.

In addition, the DOE analysis provided an incremental cost analysis of current costs for several representative classes of street electric vehicles with a gross vehicle weight rating of 14,000 pounds or more. For those vehicles placed in service during calendar year 2024, the IRS will accept a taxpayer's use, in calculating the credit amount, of the incremental cost published by the DOE.