The Inflation Reduction Act, enacted in August 2022, significantly changed the qualifications for and calculation of the tax credit available for the purchase of an alternative fuel vehicle (electric and fuel cell vehicles). The Act created the Clean Vehicle Credit with one provision effective upon enactment and the remaining provisions phased in beginning in 2023. As a result of enactment, many vehicles that previously qualified for the credit earlier in 2022 no longer qualify. Significant changes and their effective dates are discussed below.
The IRS has updated its FAQ sheet to reflect guidance issued in 2023.