When you claim a deduction for a clean-fuel vehicle or clean-vehicle refueling property, you must reduce the basis of the property by the deduction claimed, for purposes of calculating depreciation and the gain or loss on an eventual sale or disposal of the property.
Electric Vehicle Credit
If you purchase a qualified electric vehicle and place it in service during the year, you can take a tax credit. You can take this credit regardless of whether you use the vehicle for business or personal purposes, or both.
Qualified Electric Vehicle
In order to claim the credit, you must meet the following requirements.
The vehicle must be powered primarily by an electric motor drawing current from rechargeable batteries, fuel cells, or other portable sources of electrical current.
You are the first person to use it.
You acquired it for your own use and not for resale.
It has never been used as a nonelectric vehicle.
Hybrid gas-electric vehicles are not qualified electric vehicles. But you may be able to claim a deduction for these vehicles, as discussed above.
How Much is the Credit?
The credit is generally 10% of the cost of the electric vehicle, up to a maximum of $4,000 for each vehicle. If the vehicle is a depreciable business asset, you calculate the credit after reducing the cost by any section 179 deduction you take on the vehicle.
How To Claim the Credit
You must complete and attach Form 8834 to your tax return to claim the electric vehicle credit. On this form you will calculate any limitation on the amount you can claim as a credit. The total credit is limited to the excess of your regular tax liability, reduced by certain other credits, over your tentative minimum tax. The electric vehicle credit does not allow you to obtain a refund if your net regular tax is zero or less.
Individuals report the credit from Form 8834 in the Tax and Credits section of Form 1040, on the line for Other Credits.