A credit for qualifying clean cars purchased and put into operation by the taxpayer during the tax year is offered under the Inflation Reduction Act of 2022 (IRA). In accordance with the vehicle classification, the IRA added the requirements that any vehicle eligible for the new clean vehicle credit must undergo final assembly in North America and that no credit will be granted for any vehicle whose manufacturer-suggested retail price exceeds an applicable limitation.
The guidance released today notifies taxpayers that the Internal Revenue Service and the Department of the Treasury intend to propose rules clarifying the definitions of specific words in relation to the credit and outlines the anticipated content of such regulations.
The notice provides that the proposed regulations will include definitions of the following terms, which are relevant for new clean vehicles placed in service after December 31, 2022:
- Final Assembly
- North America
- Manufacturer’s suggested retail price
- Classifications for categories of vehicles, including vans, sport utility vehicles, pickup trucks, and other vehicles
- Placed in service