Looking to add a commercial vehicle fleet to your business? Going electric can bring tax breaks

The push is on to ditch gas and go electric, and business owners looking to invest in a new vehicle fleet could save money in the form of federal tax breaks if they choose electric vehicles.

The Inflation Reduction Act of 2022 created and modified tax incentives to encourage more Americans to buy electric cars and trucks. The changes include a new tax credit for businesses called the Commercial Clean Vehicle Credit.

Businesses and tax-exempt organizations that purchase approved models may qualify for a credit of up to $40,000 per electric vehicle (EV), depending on the size of the EV. Business owners must have a tax liability in order to benefit.

If you’re in the market for new commercial vehicles, here’s what you need to know:


Eligible EVs purchased on or after January 1, 2023, must be for business use only, not for resale, and the EVs must be made by a qualified manufacturer from an IRS-approved list.

Credit Amount

The credit is equal to the lesser of the following amounts: 15% of the vehicle’s purchase price for plug-in hybrid EVs, 30% of the purchase price if the vehicle is fully electric (including fuel cell electric vehicles), or the incremental cost of the vehicle.

Vehicles that weigh less than 14,000 pounds and have a battery capacity of at least seven kilowatt-hours (kWh) may qualify for up to a $7,500 credit. Vehicles that weigh more than 14,000 pounds and have a battery capacity of at least 15 kWh (medium and heavy-duty trucks and buses) may qualify for up to a $40,000 credit.

The credit also applies to electric mobile machinery.

How to Apply

An RDG+Partners tax professional can work with you to help apply for the EV tax credit by completing Schedule 1 (Form 8936-A).  This form will then be attached to your tax return to claim the credit. There is no limit on the number of credits a business can claim, but you must complete the forms for each qualified commercial clean vehicle you placed in service during the tax year. Businesses cannot combine this tax credit with the clean vehicle tax credit for consumers. The IRS will track the credits taken by Vehicle Identification Number (VIN).

Things to Consider

When you purchase an EV, you claim the full deduction in the year you buy it, offsetting part of the cost against your corporate tax return bill. The credit for qualified commercial clean vehicles for business purposes does not carry the same requirements as the EV tax credit for consumers, meaning it may be easier to qualify.



For more information or assistance in planning for an electric vehicle purchase and the subsequent tax credit application(s), contact RDG+Partners at 585-673-2600.