U.S. Department of the Treasury Releases Proposed Rules for Qualified Commercial Clean Vehicles

Proposed rules for Qualified Commercial Clean Vehicle Credit will help lower transportation costs, support domestic auto manufacturing, and strengthen U.S. energy security

WASHINGTON - Today, the U.S. Department of the Treasury (Treasury) and Internal Revenue Service (IRS) issued a Notice of Proposed Rulemaking (NPRM) on the credit for Qualified Commercial Clean Vehicles (45W) established by the Biden-Harris Administration's Inflation Reduction Act.

The credit for qualified commercial clean vehicles (45W) may be claimed by purchasing and placing in service qualified commercial clean vehicles - including certain battery electric vehicles (BEVs), plug-in hybrid EVs (PHEVs), fuel cell electric vehicles (FCEVs) and plug-in hybrid fuel cell electric vehicles (PHFCEVs). The credit is the lesser amount of either 30% of the vehicle's basis (15% for PHEV) orthe vehicle's incremental cost in excess of a vehicle comparable in size or use powered solely by gasoline or diesel. A credit up to $7,500 may be claimed for a single qualified commercial clean vehicle for cars and light-duty trucks (Gross Vehicle Weight Rating (GVWR) of less than 14,000 pounds), or otherwise $40,000 for vehicles like electric buses and semi-trucks (GVWR equal to or greater than 14,000 pounds).

"The release of Treasury's proposed rules for the commercial clean vehicle credit marks an important step forward in the Biden-Harris Administration's work to lower transportation costs and strengthen U.S. energy security," said U.S. Deputy Secretary of the Treasury Wally Adeyemo. "Today's guidance will provide the clarity and certainty needed to grow investment in clean vehicle manufacturing."

The NPRM issued today proposes rules to implement the 45W credit, including:

• Determining credit amount. The NPRM proposes various pathways for taxpayers to determine the incremental cost of a qualifying commercial clean vehicle for purposes of calculating the amount of 45W credit. For example, the NPRM proposes that taxpayers may continue to use the incremental cost safe harbors such as those set out in Notice 2023-9 and Notice 2024-5, may rely on a manufacturer's written cost determination to determine the incremental cost of a qualifying commercial clean vehicle, or may calculate the incremental cost of a qualifying clean vehicle versus an internal combustion engine (ICE) vehicle based on the differing costs of the vehicle powertrains.
• Clarifying requirements for qualifying vehicles and eligibility. The NPRM proposes rules regarding the types of vehicles that qualify for the credit and aligns certain definitional concepts with those applicable to the 30D and 25E credits. In addition, the NPRM proposes that vehicles are only eligible if they are used 100% for trade or business, excepting de minimis personal use, and that the 45W credit is disallowed for qualified commercial clean vehicles that were previously allowed a clean vehicle credit under 30D or 45W. The NPRM requests comment on issues related to off-road mobile machinery, including approaches that might be adopted in applying the definition of mobile machinery to off-road vehicles and whether to create a product identification number system for such machinery in order to comply with statutory requirements.

Treasury is encouraged by the level of uptake of the clean vehicle credits in response to the Biden-Harris Administration's Inflation Reduction Act and welcomes public comment on today's NPRM for 60 days. A public hearing is scheduled for April 28, 2025.

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