The Inflation Reduction Act (IRA) of 2022 included a wide range of tax deductions and credits. Among them is the Commercial Clean Vehicle Credit found in 26 U.S. Code § 45W that creates a substantial tax credit for businesses purchasing qualified electric vehicles. The maximum tax credit under 45W is determined by gross vehicle weight, engine type, and incremental cost of the vehicle.
- Less than 14,000 pounds (lawnmowers, forklifts, etc.): maximum credit $7,500
- 14,000 pounds or more (Sprayers, tractors, combines, etc): maximum credit $40,000
More information about the credit can be found here: https://www.irs.gov/credits-deductions/commercial-clean-vehicle-credit
The issue at hand is whether the tax applies to off-road mobile machinery. The Internal Revenue Service is construing the law to exclude off-road mobile machinery based on statutory language enacted prior to the Inflation Reduction Act.
The U.S. Department of Treasury is tasked with rulemaking and interpretations of the 45W tax credit. Over the last year, NAEDA has been working with other industry stakeholders including the Outdoor Power Equipment Institute, Association of Equipment Manufacturers, and National Association of Manufacturers to convince Treasury that 45W tax credits apply to off-road mobile machinery.
The letter submitted to Treasury by 31 members of Congress supports our industry position and reinforces the intent of Congress to specifically include off-road mobile machinery under the 45W tax credit provision. The letter requests treasury to issue guidance that will clarify this matter and direct the IRS to interpret the tax credit correctly.
We will keep you updated on the outcome of this issue. If you have any questions, please contact your association’s offices. View Letter Here
