IRS Form 8936 Instructions

If you recently purchased an electric vehicle, you may be able to claim an increased tax credit on IRS Form 8936, thanks to the changes made in the 2022 Inflation Reduction Act.

In this article, we’ll walk you through everything you should know about IRS Form 8936, including:

• How to complete IRS Form 8936
• How to calculate the business use and personal use tax credits for your electric vehicle
• Qualifying electric vehicles

Let’s start with a walkthrough of the tax form itself.

How do I complete IRS Form 8936?

There are 3 parts to this two-page tax form:

• Part I: Tentative Credit
• Part II: Credit for Business/Investment Use Part of Vehicle
• Part III: Credit for Personal Use Part of Vehicle

Let’s start by calculating the tentative tax credit in Part I.

Part I: Tentative Credit

Before we get to Line 1, we need to complete the taxpayer information at the top of the form. Enter the taxpayer name as shown on your federal income tax return, followed by the taxpayer’s identifying number.

The identifying number can be one of the following:

• Social Security number (SSN)
• Individual taxpayer identification number (ITIN)
• Employer identification number (EIN)

Once we’ve completed the taxpayer information field, we should take note of the qualifying vehicles. The following vehicles qualify for the plug-in electric drive motor vehicle credit:

• Qualified plug-in electric drive motor vehicles placed into service before 2023
• Qualified two-wheeled plug-in electric vehicles acquired before, but placed in service in 2022
• New clean vehicles placed into service after 2022

As we begin, you’ll notice that there are two columns. If you need additional columns, then use Form 8936 as many times as necessary. Include the totals of all columns on Line 12 and Line 19, below.

Line 1: Year, make, and model of vehicle

List the year, make, and model of each vehicle you placed into service during the tax year. For example, 2023 Tesla Roadster, or 2022 Honda Accord LX.

Line 2: Vehicle identification number

Enter the 17-digit vehicle identification number, or VIN, for each vehicle. The VIN of a vehicle can be obtained from any of the following:

• Vehicle’s registration
• Title
• Proof of insurance
• Actual vehicle

Line 3

In Line 3, enter the date that you placed the qualified vehicle into service.

Line 4

There are three parts to Line 4.

Line 4a

For two-wheeled vehicles, enter the total cost of the vehicle.

For vehicles with at least four wheels, enter the amount of credit allowable for the year, make, and model of vehicle you entered on Line 1. You can generally rely on the manufacturer’s (or domestic distributor’s) certification to the IRS of the credit allowable.

Line 4b

Enter 100% for all vehicles not produced by the following car manufacturers:

• Toyota
• Tesla
• General Motors (GM)

For vehicles produced by Toyota, Tesla, or GM, enter the appropriate percentage based upon the year you placed the qualifying car into service:

Toyota 

• 100% if you purchased it before October 1, 2022
• 50% if you purchased it after September 30, 2022, but before 2023
• 100% if you purchased it after 2022

Tesla & GM

• 0% if you purchased it before 2023
• 100% if you purchased it in 2023 or later

Line 4c

Multiply Line 4a by Line 4b. Enter the result here. This represents the tentative tax credit you are allowed for this vehicle.

Proceed to Part II unless either of the following applies:

• You did not use your vehicle for business or investment purposes
• You did not have a tax credit from a partnership or S corporation

If either of those applies, skip Part II and go to Part III.

Part II: Credit for Business/Investment Use Part of Vehicle

In Part II, we’ll calculate the amount of the credit attributable to business or investment business use, and account for additional tax credits from pass-through business entities.

Line 5: Business/investment use percentage

In Line 5, enter the percentage of business use or investment use. If you used the vehicle solely for business or investment use, enter 100%.

Otherwise, you must determine the percentage of business use based upon the percentage of business miles driven during the tax year. When making this calculation, do not consider commuting miles as part of business use.

For example, Mark drove his 2023 Tesla 20,000 miles during the tax year. Here is the breakdown of his mileage:

• Commuting: 5,000 miles
• Personal use: 5,000 miles
• Business use (not commuting): 10,000 miles

Based upon these numbers, his business use would be 50% (10,000 divided by 20,000).

Line 6

Multiply the tentative credit amount in Line 4c by the percentage in Line 5. Enter the result in Line 6.

For taxpayers only claiming a tax credit for four-wheel vehicles, go directly to Line 11. Otherwise, go to Line 7.

Line 7: Section 179 expense deduction

If you claimed any Section 179 expense deduction on IRS Form 4562, enter that tax deduction amount in Line 7.

Line 8

Subtract the Line 7 amount from Line 6. Enter the result here.

Line 9

Multiply Line 8 by 10%. Enter the total here.

Line 10: Maximum credit per vehicle

Do not enter anything here. $2,500 is the maximum credit you can claim for a two-wheel vehicle.

Line 11

For four-wheel vehicles, enter the Line 6 amount here.

For two-wheel vehicles, enter the smaller of:

• Line 9
• Line 10

Line 12

Add columns (a) and (b) from Line 11. Enter the combined amount in Line 12. If using more than one IRS Form 8936, enter the total of all columns used.

Line 13: Qualified plug-in electric drive motor vehicle credit from partnerships and S corporations

If you received an electric vehicle tax credit from a partnership or S corporation, enter that amount here. You will find these tax credits on the following tax forms:

• Partnerships: Schedule K-1 (Form 1065), Box 15, Code P
• S corporations: Schedule K-1 (Form 1120-S), Box 13 Code P

Partnerships and S corporations report the above credits on Line 13. All other filers figuring a separate credit on earlier lines also report the above credits on Line 13.

If you are only reporting a tax credit passed through from a business entity, and not using earlier lines to calculate a separate credit, you do not need to complete Form 8936. Simply report the above credits as a general business credit directly on IRS Form 3800, Part III, Line 1y.

Line 14: Business/investment use of credit

Add Lines 12 and 13.

Partnerships and S corporations, stop here and report this amount on Schedule K.

All other taxpayers should report this amount on IRS Form 3800, Part III, Line 1y.

If you need to calculate the tax credit for personal use, go to Part III.

Part III: Credit for Personal Use Part of Vehicle

In Part III, we’ll calculate the amount of credit you can claim for personal use.

Line 15

If you skipped Part II, then enter the amount from Line 4c, above.

If you completed Part II, then subtract Line 6 from Line 4c. Enter the result here.

For vehicles with four or more wheels, skip to Line 18. Otherwise, go to Line 16, below.

Line 16

Multiply Line 15 by 10% (0.10).

Line 17: Maximum credit per vehicle

If you did not complete Part II, enter $2,500. Otherwise, subtract Line 11 from Line 10, then enter the result here.

Line 18

For vehicles with four or more wheels that you placed into service before 2023, enter the Line 15 amount.

If you have two-wheeled vehicles, enter the smaller of:

• Line 16
• Line 17

For vehicles placed in service after 2022, use the following modified adjusted gross income (MAGI) worksheet to determine if income limits apply to your tax credit:

At the end of the worksheet, enter ‘0’ if the worksheet amount is zero or a negative number. Otherwise, enter the Line 15 amount on Line 18.

Line 19

Add columns (a) and (b) from Line 18. Enter the total here.

If using more than one IRS Form 8936, enter the total of all columns used.

Line 20

Enter the amount from Line 18 of your individual income tax return.

Line 21: Personal credits

If applicable, enter the total of the following nonrefundable tax credits:

• IRS Schedule 3, Line 1: Foreign tax credit from IRS Form 1116
• IRS Schedule 3, Line 2: Credit for child and dependent care expenses from IRS Form 2441
• IRS Schedule 3, Line 3: Education credits from IRS Form 8863
• IRS Schedule 3, Line 4: Retirement savings contributions credit from IRS Form 8880
• IRS Schedule 3, Line 6d: Credit for the elderly or disabled from Schedule R
• IRS Schedule 3, Line 6e: Alternative motor vehicle credit from IRS Form 8910
• IRS Schedule 3, Line 6l: from IRS Form 8978, Line 14
• IRS Form 5695, Line 30: Energy efficient home improvement credit

Line 22

Subtract Line 21 from Line 20. If the answer is zero or a negative number, enter ‘0,’ then stop. You cannot claim a tax credit for the personal use of a qualified vehicle.

Line 23

Enter the smaller of:

• Line 19
• Line 22

Enter this number on Schedule 3, Line 6f.

If Line 22 is smaller than Line 19, then you cannot use part of the personal portion of the credit because of the tax liability limit. the unused credit is lost. The unused personal portion of the credit cannot be carried back or forward to other tax years.

Video walkthrough

Watch this instructional video to learn more about claiming the electric vehicle tax credit with IRS Form 8936.

Qualifying vehicles

The following vehicles qualify for the electric vehicle credit:

• Qualified plug-in electric drive motor vehicles placed into service before 2023
• Qualified two-wheeled plug-in electric vehicles acquired before, but placed in service in 2022
• New clean vehicles placed into service after 2022

Let’s take a closer look at each one.

Qualified plug-in electric drive motor vehicles

According to the Internal Revenue Service, any qualifying plug-in electric drive motor vehicle is a new vehicle with at least four wheels placed in service before 2023 that:

• Is propelled to a significant extent by an electric motor that draws electricity from a battery that has a capacity of at least 4 kilowatt hours and can be recharged from an external source
• Is manufactured primarily for use on public streets, roads, and highways
• Has a gross vehicle weight rating of less than 14,000 pounds; and
• Meets certification and other use criteria, outlined below

Qualified two-wheeled plug-in electric vehicles

A qualified two-wheeled plug-in electric vehicle:

• Is capable of achieving a speed of 45 miles per hour or greater
• Is propelled to a significant extent by an electric motor that draws electricity from a battery that has a capacity of not less than 2.5 kilowatt hours and is capable of being recharged from an external source of electricity
• Is manufactured primarily for use on public streets, roads, and highways
• Has a gross vehicle weight of less than 14,000 pounds
• Meets certification and other use criteria, outlined below

Certification and other use criteria

Generally, a qualifying vehicle must be certified by the manufacturer. Additionally, the following criteria apply:

• You are the owner of the vehicle.
  • If the vehicle is leased, only the lessor and not the lessee is entitled to the credit.
• You placed the vehicle in service during the tax year.
• The original use of the vehicle began with you.
• You acquired the vehicle for use or to lease to others, and not for resale.
• You use the vehicle primarily in the United States.
• For vehicles purchased after August 16, 2022, the final assembly of the vehicle must occur within North America.

New clean vehicles

A qualified new clean vehicle is one with at least four wheels, placed into service after 2022, that:

• Is propelled to a significant extent by an electric motor that draws electricity from a battery that has a capacity of not less than 7 kilowatt hours and is capable of being recharged from an external source of electricity
• Is manufactured primarily for use on public streets, roads, and highways
• Has a gross vehicle weight of less than 14,000 pounds
• Had its final assembly within North America
• Has a manufacturer’s suggested retail price of not more than $55,000 ($80,000 for a van, sport utility vehicle (SUV), or pickup truck), and
• Meets certain clean vehicle certification and other requirements, outlined below

New Qualified Fuel Cell Motor Vehicle

This is a new vehicle with at least four wheels placed in service after 2022 that:

• Is propelled by power derived from one or more cells that convert chemical energy directly into electricity by combining oxygen with hydrogen fuel
• Is manufactured primarily for use on public streets, roads, and highways
• Had its final assembly within North America
• Has a manufacturer’s suggested retail price of not more than $55,000 ($80,000 for a van, SUV, or pickup truck), and
• Meets certain clean vehicle certification and other requirements, outlined below

Qualified fuel cell motor vehicles used to qualify for the qualified alternative vehicle credit, which taxpayers would claim using IRS Form 8910. Taxpayers may now use IRS Form 8936 to claim the credit for a qualified fuel cell vehicle.

Clean vehicle certification and use requirements

To meet the IRS’ clean vehicle certification requirements, a vehicle must be produced by a qualified manufacturer.

A qualified manufacturer is one who has entered into a written agreement with the IRS under which the manufacturer agrees to make periodic written reports to the IRS providing vehicle identification numbers (VINs) and other information about their new clean vehicles.

Information and certifications contained in these reports will help identify which vehicles qualify for the new clean vehicle credit. Manufacturers of fuel cell vehicles are also encouraged to file these reports.

The licensed dealer of new clean vehicles, including fuel cell vehicles, will provide a report to the purchaser providing necessary information for eligible taxpayers to claim this federal tax credit, including the following:

• The purchaser’s name and taxpayer identification number
• The vehicle’s VIN
• Verification that the original use of the vehicle begins with the purchaser
• The maximum new clean vehicle credit allowable for the vehicle

Frequently asked questions

Where can I find IRS Form 8936?

As with other tax forms, you may find IRS Form 8936 on the IRS website. For your convenience, we’ve enclosed the latest version in our article.

Related tax articles

This tax form is one of the fillable tax forms provided by the Internal Revenue Service, to help taxpayers reduce their tax preparation costs. To see more forms like this, visit our free fillable tax forms page, where you’ll also find articles like this.

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