Clean Vehicle Credit Transfers: Rules and Repayment

How a transfer works for an eligible transaction

For qualifying vehicles placed in service starting in 2024, an eligible buyer could elect to transfer the new or used clean vehicle credit to a registered dealer in exchange for a financial benefit, such as a price reduction or payment. The acquisition deadline and all other eligibility requirements still apply. The IRS says the election generally occurs at the time of sale, when the buyer takes possession, rather than at acquisition. See the IRS acquisition FAQ and transfer FAQ.

Reporting and income

The dealer provides a time-of-sale report and must submit required information to the IRS. Buyers must report a transferred credit on their tax return using Form 8936 and its applicable instructions. The IRS explains that a buyer who does not meet the applicable income limits must repay the transferred credit when filing; an initial good-faith estimate does not eliminate that obligation. The year the vehicle is placed in service and the preceding year may be relevant to the income test.

Tax liability is treated differently

According to the IRS transfer FAQ, an eligible transferred credit may exceed the buyer’s regular tax liability, and that excess alone is not subject to recapture. This differs from claiming a non-transferred personal credit on a return. Other eligibility and repayment rules still apply.