What the Form Is For

Schedule A (Form 8936), Part V is the IRS worksheet that businesses and tax-exempt organizations use to calculate the exact dollar amount of the Qualified Commercial Clean Vehicle Credit they can claim. This credit helps businesses offset the cost of purchasing electric vehicles, plug-in hybrid electric vehicles, and hydrogen fuel cell vehicles for commercial use.

Unlike personal vehicle credits, the commercial clean vehicle credit is designed for businesses that purchase vehicles for use in their operations or to lease to others. The credit amount varies based on the vehicle's weight, engine type, and purchase price, with maximum credits ranging from $7,500 to $40,000 per vehicle. Schedule A (Part V) walks you through the specific calculations to determine your exact credit amount for each qualifying vehicle, which you then report on Form 8936 and Form 3800 (General Business Credit).

Important Note

This credit was terminated for vehicles acquired after September 30, 2025, under the One, Big, Beautiful Bill legislation. However, if you acquired the vehicle on or before September 30, 2025, and placed it in service after that date, you can still claim the credit.

When You’d Use This Schedule (Including Late or Amended Returns)

You complete Schedule A (Form 8936), Part V when you've purchased a qualifying commercial clean vehicle during your tax year and are ready to file your business tax return. You must complete a separate Schedule A for each qualifying vehicle you purchased.

Standard Filing

Attach Schedule A to your regular business tax return for the year you placed the vehicle in service (the date you took possession and started using it). Partnerships and S corporations must file Form 8936 directly; other taxpayers report the credit on Form 3800, line 1aa.

Late Filing

If you forgot to claim the credit on your original return, you can file an amended return (Form 1040-X for individuals with business income, or the appropriate amended business return) within three years from the date you filed your original return or two years from the date you paid the tax, whichever is later. Attach Schedule A (Part V) and all related forms to document your credit claim.

Amended Returns

If you need to correct information about a vehicle you already claimed or discovered you qualified for a larger credit amount than you originally claimed, file an amended return with a corrected Schedule A (Part V).

IRS.gov/Form8936

Key Rules and Requirements for 2024

To qualify for the commercial clean vehicle credit in 2024, your vehicle must meet these requirements:

Vehicle Qualifications

The vehicle must be a new (not used) electric vehicle, plug-in hybrid, or fuel cell vehicle made by a qualified manufacturer. It must have either a battery capacity of at least 7 kilowatt hours (for vehicles under 14,000 pounds) or 15 kilowatt hours (for vehicles 14,000 pounds or more), or be a hydrogen fuel cell vehicle meeting specific technical requirements under Internal Revenue Code section 30B(b)(3).

Business Use

The vehicle must be subject to depreciation allowance (meaning it's used in your business), though tax-exempt organizations have a special exception. You must acquire it for business use or to lease to others—not for immediate resale. You cannot be leasing the vehicle from someone else.

Credit Amount Calculation

For 2024, the IRS provides safe harbor incremental cost amounts per Notice 2024-5: $7,500 for most street electric vehicles under 14,000 pounds (except compact plug-in hybrids, which use $7,000), and $40,000 for vehicles 14,000 pounds or more. Your credit is the smallest of three numbers: (1) 30% of the vehicle's basis if it's fully electric or 15% if it's also powered by gas/diesel, (2) the incremental cost (excess purchase price over a comparable gas vehicle), or (3) the maximum credit limit ($7,500 or $40,000 depending on vehicle weight).

No Double-Dipping

You cannot claim both a new personal clean vehicle credit (Form 8936, Part II/III) and the commercial credit for the same vehicle. Choose whichever credit is more beneficial.

Seller Reporting

For vehicles placed in service in 2024, the seller must file a report through the IRS Energy Credits Online portal providing your information and the vehicle's details.

IRS.gov/credits-deductions/commercial-clean-vehicle-credit

Step-by-Step (High Level)

Step 1: Document Vehicle Details (Part I, Lines 1-7)

Enter the vehicle year, make, model, VIN (17-character identification number), and the date you placed it in service (the date you took possession). Answer whether this is a qualified commercial clean vehicle on line 7 to reach Part V.

Step 2: Answer Eligibility Questions (Lines 18a-18e)

If you're a tax-exempt entity making an elective payment election, enter your IRS registration number on line 18a. Confirm the vehicle is subject to depreciation (line 18b), that you acquired it for business use and not resale (line 18c), and whether it has any gas or diesel engine component (line 18d). Enter the vehicle's gross vehicle weight rating—GVWR—on line 18e, as this determines your maximum credit.

Step 3: Calculate Your Basis (Lines 19-21)

Enter the vehicle's cost or other tax basis on line 19. If you claimed a Section 179 expense deduction for immediate write-off, enter that amount on line 20 and subtract it from line 19 to get your adjusted basis on line 21.

Step 4: Apply the Percentage (Line 22)

Multiply your adjusted basis (line 21) by either 30% if the vehicle is fully electric (you answered "No" on line 18d) or 15% if it's also powered by gas or diesel (you answered "Yes"). This is your basis-percentage credit amount.

Step 5: Compare with Incremental Cost (Lines 23-24)

Enter the vehicle's incremental cost on line 23. For 2024, use the safe harbor amounts from Notice 2024-5: $7,500 for most street EVs under 14,000 pounds, or $40,000 for vehicles 14,000+ pounds. Compare line 22 and line 23, and enter the smaller amount on line 24.

Step 6: Apply Maximum Credit Limit (Lines 25-26)

Enter the statutory maximum credit: $7,500 if your vehicle's GVWR is under 14,000 pounds, or $40,000 if it's 14,000 pounds or more. Compare this maximum to your line 24 amount, enter the smaller number on line 26—this is your final credit amount. Transfer this amount to Form 8936, Part V, line 19.

IRS.gov/pub/irs-pdf/i8936.pdf

Common Mistakes and How to Avoid Them

Mistake #1: Using the wrong percentage for plug-in hybrids

Many taxpayers mistakenly use the 30% rate for plug-in hybrid vehicles that have both electric and gas/diesel engines. The correct rate is 15% for any vehicle "also powered in part by gas or diesel" (line 18d answer is "Yes"). Double-check your vehicle specifications—if it has any combustion engine component, you must use 15%.

Mistake #2: Forgetting to reduce basis by Section 179 deductions

If you claimed an immediate Section 179 expense deduction for the vehicle on Form 4562, you must subtract that amount on line 20 before calculating your credit. Failing to do this inflates your credit calculation and could trigger an audit correction.

Mistake #3: Using the wrong incremental cost for 2024

The IRS provides safe harbor incremental cost amounts for 2024 that vary by vehicle type. Don't estimate or calculate incremental cost yourself—use $7,500 for most street electric vehicles under 14,000 pounds (except compact car PHEVs which use $7,000), or $40,000 for heavier vehicles. Check Notice 2024-5 for the complete list.

Mistake #4: Claiming credit for leased vehicles when you're the lessee

Only the vehicle owner can claim the credit. If you're leasing the vehicle from another party, answer "No" on line 18c and stop—you cannot claim the credit. This is one of the most common disqualifications during IRS review.

Mistake #5: Not completing a separate Schedule A for each vehicle

If you purchased multiple qualifying vehicles in the same year, you must complete a separate Schedule A (Part V) for each one. Many businesses mistakenly combine multiple vehicles on one schedule, which makes verification impossible.

Mistake #6: Confusing this credit with personal clean vehicle credits

The commercial credit (Part V) is different from the new clean vehicle credit (Parts II/III) and previously owned credit (Part IV). Commercial credits have different rules, no income limits, and can be claimed by businesses and tax-exempt organizations. Make sure you're using the right part of the form for your situation.

What Happens After You File

Once you attach your completed Schedule A (Form 8936), Part V to your business tax return and claim the credit on Form 3800, the IRS processes your claim as part of your overall return. For most taxpayers, the credit is nonrefundable, meaning it reduces your business tax liability to zero but won't generate a refund beyond what you owe. However, the credit can be carried over to future tax years as a general business credit if you can't use the full amount in the current year.

Tax-Exempt Organizations and Elective Payment

Tax-exempt organizations and governmental entities that made an elective payment election (and entered their registration number on line 18a) have a different experience—the IRS treats their credit as a payment of income tax, which can result in a refund even though they normally don't owe income tax. These entities must file Form 990-T (even if not normally required) along with Form 3800 and their Schedule A.

IRS Verification

The IRS may verify your vehicle information against seller reports filed through the Energy Credits Online portal. If there's a mismatch in your VIN, vehicle specifications, or credit amount, you may receive a notice requesting additional documentation.

Recapture Rules

If you dispose of the vehicle or it no longer qualifies for the credit within a certain period, you may have to recapture (pay back) part or all of the credit. The IRS calculates recapture based on how long you used the vehicle and the circumstances of disposition. See Regulations sections 1.30D-4 and IRC section 45W(d)(1) for specific recapture scenarios.

Basis Adjustment

Remember that you must permanently reduce your vehicle's tax basis by the credit amount you claimed (line 26). This affects future depreciation calculations and gain/loss calculations when you eventually sell or dispose of the vehicle.

IRS.gov/credits-deductions/commercial-clean-vehicle-credit

FAQs

Q1: Can I claim this credit for a used electric vehicle I purchased for my business?

No. The Qualified Commercial Clean Vehicle Credit (Part V) is only for new vehicles placed in service after 2022. "Previously owned" vehicles have a separate credit (Part IV of Schedule A), but that credit is limited to individual taxpayers, not businesses. The vehicle must be new and you must be the first owner to qualify for the commercial credit.

Q2: My business purchased a $65,000 electric delivery van that weighs 9,000 pounds. How much credit can I claim?

Your maximum credit is $7,500 because your vehicle's GVWR (9,000 pounds) is less than 14,000 pounds. To calculate your actual credit, take the smaller of: (1) 30% of the vehicle's adjusted basis (since it's fully electric), (2) the incremental cost ($7,500 safe harbor for 2024), or (3) the $7,500 maximum. In most cases with street electric vehicles, the $7,500 safe harbor incremental cost becomes your limiting factor, so you'll likely claim the full $7,500.

Q3: I bought a plug-in hybrid commercial vehicle in October 2025. Can I still claim the credit?

Only if you acquired it (entered into a binding written contract and made a payment) on or before September 30, 2025. The credit was eliminated for vehicles acquired after that date under the One, Big, Beautiful Bill. If you acquired it by September 30 but didn't take possession until October, you can still claim the credit. Document your acquisition date carefully with your purchase contract and payment records.

Q4: Our nonprofit organization purchased an electric vehicle for our community outreach program. Can we claim this credit?

Yes! Tax-exempt organizations can claim the commercial clean vehicle credit, and you have a special benefit: you can make an "elective payment election" that treats the credit as a payment of income tax, potentially resulting in a refund. You must pre-register through the IRS portal and enter your registration number on line 18a. You'll need to file Form 990-T along with Form 3800 and Form 8936, even if you don't normally file Form 990-T.

Q5: I'm leasing an electric vehicle for my business from a dealer. Can I claim the credit?

No. Only the vehicle's owner can claim the credit. When you lease from a dealer, the leasing company owns the vehicle and they claim the credit. However, they often pass the credit savings to you through lower monthly lease payments. If you purchased the vehicle outright for your business (not leasing), then you're the owner and can claim the credit.

Q6: What's the difference between "incremental cost" and the vehicle's purchase price?

Incremental cost is the extra amount you paid for the clean vehicle compared to what you'd pay for a comparable gas or diesel vehicle with similar size and features. Calculating this precisely is complex, so the IRS provides "safe harbor" amounts for 2024: you can use $7,500 for most street electric vehicles under 14,000 pounds, or $40,000 for vehicles 14,000+ pounds. Using these safe harbor amounts is much simpler than documenting comparable vehicle prices.

Q7: Can I claim both this credit and Section 179 immediate expensing for the same vehicle?

Yes, but you must adjust your credit calculation. If you claim Section 179 expensing (which lets you immediately deduct the vehicle's cost), you must reduce your vehicle's basis by that deduction amount before calculating the percentage on line 22. For example, if your vehicle cost $50,000 and you claimed $25,000 in Section 179 deductions, you only multiply $25,000 by the applicable percentage (15% or 30%) when calculating your credit. You must also reduce the vehicle's basis by the credit amount itself when claimed.

For More Information

• Full instructions: IRS.gov/instructions/i8936
• Commercial clean vehicle credit overview: IRS.gov/credits-deductions/commercial-clean-vehicle-credit
• Clean vehicle credits FAQ: IRS.gov/clean-vehicle-tax-credits
• Download forms: IRS.gov/Form8936

This summary is for general information purposes and based on 2024 tax year rules. Tax laws change frequently. Consult the official IRS instructions and a qualified tax professional for your specific situation.