Frequently Asked Questions
Can I use the prior year's AGI if my income is lower?
Yes. The IRS allows you to use the lower of your current-year or prior-year modified AGI to determine eligibility. This is helpful if income spiked due to a one-time event like a bonus, stock sale, or Roth conversion. You must still meet the requirement in either year.
What does 'final assembly in North America' mean?
The vehicle must be assembled in the United States, Canada, or Mexico. Assembly location is separate from brand country of origin - a foreign automaker's plant in North America qualifies, while a domestic brand's overseas plant does not. The VIN's first character often indicates assembly country, but check the DOE's list at fueleconomy.gov for confirmation.
What if the dealer does not participate in the point-of-sale transfer?
Dealers must register with the IRS to participate in point-of-sale transfers. Most major dealers now participate. If your dealer does not, you must claim the credit on your tax return instead, which only works if you owe enough federal income tax to absorb the non-refundable credit.
Does the credit apply to plug-in hybrid vehicles?
Yes, qualifying PHEVs (plug-in hybrid electric vehicles) are eligible for the Clean Vehicle Credit under the same income and MSRP rules. The credit amount depends on the battery capacity, and it may be less than $7,500 for PHEVs with smaller battery packs. Check the specific vehicle's eligibility at fueleconomy.gov.
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