IRS Instruction 8936 – IRS Forms, Instructions, Pubs 2026 – If you’re considering purchasing an electric vehicle (EV) or other clean vehicle, understanding IRS Form 8936 is essential for maximizing your tax savings. This form, along with Schedule A (Form 8936), helps you claim credits for qualifying clean vehicles placed in service during your tax year. With incentives like the New Clean Vehicle Credit, Previously Owned Clean Vehicle Credit, and Qualified Commercial Clean Vehicle Credit, you could save up to $7,500 or more on your taxes. However, these credits are time-sensitive— they’re only available for vehicles acquired on or before September 30, 2025, due to recent legislative changes. In this comprehensive guide, we’ll break down the instructions for Form 8936, eligibility requirements, how to file, and key updates for tax year 2025.
What Is IRS Form 8936?
IRS Form 8936, titled “Clean Vehicle Credits,” is the official document used to calculate and claim tax credits for eligible clean vehicles. It replaced the older Qualified Plug-in Electric Drive Motor Vehicle Credit for vehicles purchased after December 31, 2022. You must attach a separate Schedule A for each vehicle you’re claiming a credit for, and even if you transferred the credit to the dealer at the time of purchase, you’ll still need to file this form.
The form is structured into five parts:
- Part I: Calculates your modified adjusted gross income (MAGI) to check eligibility based on income limits.
- Part II: Figures the credit for business or investment use of new clean vehicles.
- Part III: Handles the personal use portion of new clean vehicle credits.
- Part IV: Computes the credit for previously owned clean vehicles.
- Part V: Determines the credit for qualified commercial clean vehicles.
For visual reference, here’s an example of what Form 8936 looks like:
Types of Clean Vehicle Credits Available
Form 8936 covers three main credits, each with specific rules and amounts. Here’s a comparison:
| Credit Type | Maximum Amount | Vehicle Requirements | Who Qualifies |
|---|---|---|---|
| New Clean Vehicle Credit | Up to $7,500 | New EVs or fuel cell vehicles with battery ≥7 kWh, MSRP ≤$55,000 ($80,000 for vans/SUVs/pickups), final assembly in North America, no foreign entity of concern. | Individuals, businesses; MAGI limits apply (e.g., $300,000 for joint filers). |
| Previously Owned Clean Vehicle Credit | Lesser of $4,000 or 30% of sales price | Used EVs or fuel cell vehicles (model year ≥2 years old), sales price ≤$25,000, purchased from dealer. | Individuals only; MAGI limits (e.g., $150,000 for joint filers); no prior claim in last 3 years. |
| Qualified Commercial Clean Vehicle Credit | Up to $7,500 ($40,000 for vehicles ≥14,000 lbs GVWR) | Business-use EVs or fuel cell vehicles with battery ≥15 kWh (or ≥7 kWh for <14,000 lbs GVWR); no MAGI limits. | Businesses, tax-exempt entities; based on incremental cost over comparable gas vehicles. |
These credits encourage the shift to sustainable transportation, but remember, vehicles must be placed in service (i.e., you take possession) during the tax year, and primarily used in the U.S.
Eligibility Requirements for Clean Vehicle Credits
To qualify for any credit on Form 8936, your vehicle must meet strict definitions set by the IRS. Key criteria include:
- Battery Capacity: At least 7 kWh for new and previously owned vehicles; 15 kWh for commercial (or 7 kWh if under 14,000 lbs GVWR).
- Gross Vehicle Weight Rating (GVWR): Under 14,000 lbs for new and previously owned; no limit for commercial.
- Acquisition Date: A binding contract and payment must be made on or before September 30, 2025.
- Seller Report: For vehicles placed in service after 2023, the dealer must submit a report via the IRS Energy Credits Online (ECO) portal.
- Income Limits (MAGI): For new vehicles, up to $300,000 (joint), $225,000 (head of household), $150,000 (single). For previously owned, half those amounts. No limits for commercial credits.
- Other Rules: Vehicle not for resale, original use begins with you (new) or prior owner (used), and it must be from a qualified manufacturer.
Fuel cell vehicles that meet propulsion requirements also qualify. Check the seller’s report for the maximum allowable credit based on your vehicle’s VIN.
How to Fill Out Form 8936 and Schedule A
Filing Form 8936 requires careful attention to detail. Start by completing a separate Schedule A for each vehicle. Here’s a step-by-step overview:
- Vehicle Details (Schedule A, Part I): Enter year, make, model, VIN, and placed-in-service date. Indicate if you transferred the credit to the dealer.
- Credit Calculation: Depending on the vehicle type, complete Parts II (new business/investment), III (new personal), IV (previously owned), or V (commercial). For example, for previously owned, enter the lesser of $4,000 or 30% of the sales price.
- MAGI Check (Form 8936, Part I): Input your 2025 and 2024 AGI figures to verify you don’t exceed limits.
- Total Credits: Aggregate amounts from Schedule A and report on the appropriate parts of Form 8936. Business credits go to Form 3800; personal to Schedule 3 (Form 1040).
- Basis Reduction: Reduce your vehicle’s tax basis by the credit amount claimed.
If you transferred the credit, report it as directed—even if it reduces your eligibility due to income limits. For a visual aid on Schedule A, see this example:
Always consult the official instructions or a tax professional, as errors could lead to recapture of the credit.
Recent Updates for Tax Year 2025
The landscape for clean vehicle credits changed significantly in 2025. The One Big Beautiful Bill Act (Public Law 119-21), signed in July 2025, ended these credits for vehicles acquired after September 30, 2025. This cutoff applies to all three credit types. Additionally:
- Safe harbor rules for commercial credits provide a $7,500 incremental cost assumption for most vehicles under 14,000 lbs GVWR (per Notice 2025-9).
- Credit transfers to dealers remain available for immediate savings, but you must file Form 8936 to confirm.
- No changes to income thresholds or vehicle requirements from 2024, but always check for IRS FAQs on modifications under the new law.
These updates emphasize acting quickly if you’re planning a purchase.
Frequently Asked Questions About Form 8936
- Can I claim the credit if I lease a vehicle? No, lessees don’t qualify; only the lessor (owner) can claim it.
- What if my income exceeds the limits? You can’t claim the new or previously owned credits, and transferred amounts may need to be reported as income.
- How do I know if my vehicle qualifies? Use the VIN to check with the dealer or IRS resources; they must provide a compliance report.
- Is the credit refundable? For personal use, it’s nonrefundable (limited to your tax liability). Commercial credits can be refundable for certain entities.
For more details, refer to the IRS website or consult a tax advisor.
Conclusion: Maximize Your Clean Vehicle Tax Savings
Navigating IRS Form 8936 and its instructions can unlock significant tax benefits for eco-friendly vehicle owners in 2025. With credits up to $7,500 for new EVs and $4,000 for used ones, it’s worth checking your eligibility before the September 30, 2025, deadline. Whether you’re an individual or business, proper filing ensures you don’t miss out. Download the latest forms from the IRS and file accurately to support a greener future while saving on taxes.