Does “sales price” include sales tax for the IRS Used Clean Vehicle Credit?

Question

I am considering purchasing a used electric vehicle (EV) from a dealer, and I am wondering whether it qualifies for the 2023 $4,000 Used EV Credit from the 2022 Inflation Reduction Act. According to IRS: Used Clean Vehicle Credit, it must “Have a sale price of $25,000 or less”.

Does the “sale price” include sales tax and dealer fees? Do I have to make sure to buy a car with a list price of about $23,000 so that the maximum cost is at most $25,000? If so, which taxes and fees count toward the “sale price”? Or will a car still qualify for the credit if the dealer list price is $25,000 but the actual cost is about $27,000?

Answer 1

late response, but at ( https://www.irs.gov/pub/taxpros/fs-2023-22.pdf ) ... IRS SAYS:

Q2. Is there a price limitation on a previously-owned clean vehicles eligible for the credit? (updated October 6, 2023) A2. If the sales price exceeds the $25,000 limitation for previously-owned clean vehicle, the vehicle is not eligible for the previously-owned clean vehicle credit. The sale price of a previously-owned clean vehicle means the total sale price agreed upon by the buyer and seller in a written contract at the time of sale, including any delivery charges and after the application of any incentives, but excluding separately-stated taxes and fees required by State or local law. The sale price of a previously owned clean vehicle is determined before the application of any trade-in value. The sale price does not include separate financing, extended warranties, or insurance.

Answer 2

In the US, sales price doesn't include taxes or fees. When you get your purchase paperwork from the dealership, you'll see the sales price of the car, and all the fees and taxes listed separately.

The credit only applies to the sales price, not your overall cost (which would be inclusive of taxes and fees).