Treasury and the IRS recently said they will use the EPA Fuel Economy Labeling Standard in proposed regulations to define which vehicles are eligible for the Sec. 30D clean vehicle tax credits, enacted as part of the Inflation Reduction Act.
According to Notice 2023-16, the IRS said it will change the vehicle classification standard used to determine whether a vehicle is a van, SUB, pickup truck or other vehicle to qualify for the clean vehicle tax credit.
The update is a change from the notice of intent to propose regulations in Notice 2023-1, released in December, which stated the IRS would use existing EPA Corporate Average Fuel Economy standards to determine whether the vehicle is a sedan, SUV or other types of vehicle and subject to the $55,000 or $80,000 manufacturer’s suggested retail price (MSRP) limitation.
The IRS made the change to “make it easier for consumers to know which vehicles qualify under the applicable MSRP cap,” the agency said in a news release. “This change will allow crossover vehicles that share similar features to be treated consistently.” Learn more.