The form covers three different credits: the New Clean Vehicle Credit (up to $7,500 for brand-new electric or fuel cell vehicles), the Previously Owned Clean Vehicle Credit (up to $4,000 for used EVs), and the Qualified Commercial Clean Vehicle Credit (for businesses buying clean vehicles, up to $7,500 or $40,000 depending on vehicle size). When you file your taxes, this form tells the IRS that you bought a qualifying vehicle and calculates exactly how much money you can get back. IRS.gov

Starting in 2024, you'll also need to complete Schedule A (Form 8936) for each individual vehicle you purchased. This schedule captures all the details about your specific car—its Vehicle Identification Number (VIN), purchase date, and whether you transferred the credit to the dealer at the time of sale.

What Form 8936 Is For

Form 8936 is the IRS tax form you use to claim federal tax credits when you buy a clean vehicle—either a new electric vehicle (EV), a used EV, or a commercial clean vehicle. Think of it as your official paperwork to get money back from the government for choosing an environmentally friendly car.

When You’d Use Form 8936 (Late or Amended Filing)

You must file Form 8936 with your tax return for the year you took possession of the vehicle—not the year you ordered it or paid a deposit. If you bought your EV in December 2024 but didn't pick it up until January 2025, you'd file Form 8936 with your 2025 tax return (filed in 2026).

Late filing: If you forgot to claim the credit when you originally filed, you can file an amended return using Form 1040-X. You'll need to attach Form 8936 and Schedule A to your amended return. However, you must file within three years of the original return's due date to claim the credit. IRS.gov

Important exception: If you transferred the credit to your dealer at the time of purchase (getting an immediate discount), you must file Form 8936 even if you're not claiming any additional credit. This requirement started for vehicles placed in service after December 31, 2023. The IRS uses this form to reconcile the advance payment the dealer received on your behalf.

Key Rules or Details for 2024

Vehicle Requirements

• Must be a new EV with at least 7 kilowatt hours of battery capacity
• Final assembly must occur in North America
• For new vehicles: MSRP can't exceed $55,000 for cars or $80,000 for vans, SUVs, and pickup trucks
• For used vehicles: Sale price can't exceed $25,000, and the model year must be at least 2 years earlier than the purchase year
• Must be purchased from a registered dealer who submits a time-of-sale report to the IRS IRS.gov

Income Limits (Modified Adjusted Gross Income)

For new vehicles:

• $300,000 for married filing jointly
• $225,000 for head of household
• $150,000 for all other filers

For used vehicles:

• $150,000 for married filing jointly
• $112,500 for head of household
• $75,000 for all other filers

Here's a helpful rule: you can use your income from either the year you bought the vehicle or the previous year—whichever is lower. This gives you flexibility if you had an unusually high-income year. IRS.gov

Critical Minerals and Battery Components

For vehicles placed in service after April 18, 2023, there are additional requirements about where battery materials come from. The credit is split into two parts—$3,750 for meeting critical minerals requirements and $3,750 for meeting battery component requirements. If your vehicle meets both, you get the full $7,500.

Time-of-Sale Report

Starting January 1, 2024, the seller must file a report through the IRS Energy Credits Online (ECO) portal within three days of your purchase. Without this report, your vehicle isn't eligible for the credit—no exceptions. Keep your copy of this report; you'll need information from it to complete Form 8936.

Step-by-Step (High Level)

Overview

Step 1: Verify Eligibility Before Purchase

Before buying, confirm your income is below the limits and the dealer is registered with the IRS. The IRS provides information about eligible vehicles on their website.

Step 2: Get Your Time-of-Sale Report

When you take possession of the vehicle, the dealer must give you a time-of-sale report showing the VIN, credit amount, and IRS acceptance confirmation. Keep this document safe—you'll need it at tax time. IRS.gov

Step 3: Complete Schedule A (Form 8936)

Fill out a separate Schedule A for each vehicle. You'll enter:

• Vehicle VIN (from your registration or window sticker)
• Date you took possession
• Whether you transferred the credit to the dealer
• Business vs. personal use percentage (if applicable)

Step 4: Complete Form 8936 Part I (Income Verification)

Calculate your modified AGI for both 2024 and 2023. Enter the amounts on lines 1a and 3a. The form will verify you're under the income limits.

Step 5: Complete the Appropriate Credit Section

• Part II and III: For new clean vehicles (Part II for business use, Part III for personal use)
• Part IV: For previously owned clean vehicles
• Part V: For qualified commercial clean vehicles
  The form will calculate your credit amount based on the information from Schedule A.

Step 6: Attach to Your Tax Return

Include Form 8936 and all Schedules A when you file Form 1040. The credit will reduce your tax liability dollar-for-dollar (or increase your refund if you transferred it to the dealer and qualify for more).

Common Mistakes and How to Avoid Them

Mistake #1: Not Getting the Time-of-Sale Report

Without this report filed by your dealer through ECO, you cannot claim the credit—period. Solution: Before finalizing your purchase, confirm the dealer will provide the report. If you don't receive it at pickup, contact the dealer immediately. IRS.gov

Mistake #2: Using Income from Only One Year

Many taxpayers forget they can use the lower of their current or previous year's income. If you got a raise or bonus that pushed you over the limit in 2024 but were under in 2023, you still qualify. Solution: Calculate your modified AGI for both years and use whichever helps you qualify.

Mistake #3: Entering the VIN Incorrectly

VINs contain no letters O, Q, or I (to avoid confusion with numbers 0 and 1). If the IRS rejects your return due to Form 8936, double-check you entered the VIN exactly as shown on your title. Even one character wrong will cause rejection.

Mistake #4: Forgetting to File When You Transferred the Credit

If you got an instant discount by transferring the credit to the dealer, you still must file Form 8936. Many taxpayers think they're done because they already received the benefit. Solution: Always file Form 8936 for vehicles purchased in 2024 or later, regardless of whether you transferred the credit.

Mistake #5: Claiming the Credit for a Leased Vehicle

Only the vehicle owner—not the lessee—can claim the credit. If you're leasing, the leasing company claims the credit (though they often pass savings to you through lower lease payments). Solution: Don't file Form 8936 if you're leasing.

Mistake #6: Not Reducing Vehicle Basis

You must reduce the "basis" (essentially, the value for tax purposes) of your vehicle by the credit amount. This affects depreciation if you use the car for business. Solution: Note the credit amount and inform your tax preparer if you'll claim business use or depreciation.

What Happens After You File

If You Didn't Transfer the Credit

The credit directly reduces your tax bill. If you owe $10,000 in taxes and qualify for a $7,500 credit, you'll only owe $2,500. If your tax liability is less than the credit amount, unfortunately, you lose the excess—the personal portion of the credit isn't refundable and can't be carried forward to future years. IRS.gov

If You Transferred the Credit

Form 8936 reconciles the advance payment. If you transferred $7,500 but your actual income or circumstances mean you only qualify for $5,000, you'll owe $2,500 back on your return (reported on Schedule 2, Form 1040, line 1b). Conversely, if you qualify for more than you transferred (rare, but possible), you can claim the difference.

Processing Time

Returns with Form 8936 may take longer to process while the IRS verifies the dealer's time-of-sale report. If there's a discrepancy, the IRS may send a letter requesting additional documentation. Respond promptly with your copy of the time-of-sale report and purchase documents.

Recapture Rules

If you sell or stop using the vehicle primarily in the U.S. within three years of purchase, you may have to repay part of the credit. The IRS uses a complex formula in Regulations section 1.30D-4, but generally, the recapture amount decreases each year you own the vehicle.

State Credits

Many states offer additional EV tax credits or rebates separate from the federal credit. Check your state's revenue department website—these credits stack on top of the federal benefit.

FAQs

Q1: Can I claim the credit if I buy a used EV from a private seller?

No. To qualify for the Previously Owned Clean Vehicle Credit, you must purchase from a licensed dealer who files the required seller report. Private party sales don't qualify, even if the vehicle otherwise meets all requirements.

Q2: What if I'm just slightly over the income limit?

Unfortunately, these are hard cutoffs—even $1 over disqualifies you entirely. However, remember you can use either your current year or previous year income. Also, "modified AGI" is generally the same as your AGI on Form 1040 line 11, so there's no adjustment that might help you qualify.

Q3: Can I claim credits for multiple vehicles in the same year?

Yes, for new and commercial vehicles. However, for previously owned vehicles, you can only claim one credit every three years. Additionally, if you transfer credits at the time of sale, you can make no more than two credit transfers per tax year. IRS.gov

Q4: Do I need to keep my vehicle for a certain period to avoid losing the credit?

While there's no explicit holding period, recapture rules apply if the vehicle stops qualifying within three years (for example, if you sell it or move it abroad). The recapture amount depends on how long you've owned it—generally, risk decreases after each year of ownership.

Q5: What happens if my dealer goes out of business or didn't file the report?

You're unfortunately out of luck for the credit. The IRS requires the dealer to file the time-of-sale report through ECO—there's no workaround. This is why it's critical to verify the dealer is registered and get your copy of the confirmation before finalizing the purchase. IRS.gov

Q6: Can I use the credit for a vehicle I use for business?

Yes, but it's handled differently. The business-use portion goes through Form 3800 as a general business credit, while the personal-use portion is a personal credit on Schedule 3. You'll calculate the business/investment use percentage based on mileage logs showing business vs. personal miles.

Q7: Does the vehicle have to be 100% electric to qualify?

For the new and used clean vehicle credits, yes—plug-in hybrids with at least 7 kWh of battery capacity qualify. For the commercial clean vehicle credit, the rules are more flexible, but the credit is reduced from 30% to 15% if the vehicle also has a gasoline or diesel engine.

For More Information:
Visit the official IRS Clean Vehicle Credits page at IRS.gov/CleanVehicles or download Form 8936 and instructions at IRS.gov/Form8936.