Washington, D.C. — Recently, 20 companies and trade groups sent a letter to the U.S. Department of the Treasury, calling for expanded eligibility of the Section 45W Commercial Vehicle Credit to include off-road vehicles. The letter highlights concern regarding the narrow interpretation of eligibility for the 45W tax credit, created under the Inflation Reduction Act of 2022 (IRA), and the clear congressional intent to include forklifts, cranes, tractors, off-road yard trucks, and more. As Treasury is expected to update the guidance for the credit, this letter underscores the urgency for the Internal Revenue Service (IRS) to adopt a more inclusive definition that aligns with the original intent of Congress. 

In response to this letter, CALSTART’s Federal Policy Director, Levi Kamolnick, stated: 

“The commercial vehicle credit has been a valuable policy tool to accelerate electric vehicle deployment and would have a similar effect on the off-road sector. CALSTART strongly supports policies that accelerate adoption of clean energy technology and applauds these companies for calling on Treasury to do just that. Failing to make these changes would be a significant loss of climate benefits and progress toward decarbonizing essential commercial equipment.”  

Background 

The 45W tax credit is designed to accelerate the adoption of electric vehicles and incentivize the development of clean technologies, but many manufacturers have been denied prequalification due to restrictive criteria. Congress intended for the credit to cover a broader range of vehicles and equipment, as supported by specific language in the statute, as well as remarks from Senators Chris Van Hollen and Ron Wyden during Senate discussions on the IRA before passage. Letter signatories argue that the current exclusion of off-road vehicles is a misinterpretation of the statute, hindering the transition to cleaner technology by slowing the adoption of electric alternatives to equipment with significant emissions impacts. 

“The 45W Commercial Vehicle Credit is an excellent opportunity to incentivize the purchase of the most efficient, green tractors and machinery available. Unfortunately, the IRS’s current interpretation is far too narrow and doesn’t follow the clear intent of Congress. Associated Equipment Dealers urges the IRS to revisit its current guidance and adopt a more expansive view clarifying that non-road vehicles are eligible for the 45W tax credit,” said Daniel B. Fisher, Senior Vice President, Government & External Affairs, Associated Equipment Distributors. 

“The need for America-made zero-emission vehicles within the business community goes beyond our roadways—it extends to ports, airports, rail yards, warehouses, farms, construction sites, and other transportation hubs that are vital to our economy,” said Zach Friedman, Senior Director, Federal Policy, Ceres. “Off-road vehicles in our country’s economic hubs are major contributors to corporate emissions and air pollution. Expanding eligibility for the 45W commercial vehicle tax credit to cover this sector will significantly enhance climate, economic, and air quality benefits for businesses and the communities in which they operate.” 

The Association of Equipment Manufacturers’ Vice President of Federal Affairs, Kate Fox Wood, stated: “It is vital that interpretation and implementation of Section 45W follow congressional intent and fully serve the intended purpose of the IRA. The mobile machinery industry has made—and continues to make—great strides in achieving substantial emissions reductions in their products, and currently offers cutting-edge battery, hybrid, and zero-emission options for sale with more in development. Smart and effective implementation of these types of incentives is critical to reducing non-road emissions and achieving wide-scale deployment of these new technologies.” 

About CALSTART

A mission-driven industry organization focused on transportation decarbonization and clean air for all, CALSTART has offices in New York, Michigan, Colorado, California, Florida, and Europe. CALSTART is uniquely positioned to build the national clean transportation industry by working closely with its 285 member companies and building on the lessons learned from the major programs it manages for the State of California. CALSTART manages more than $500 million in vehicle incentive and technical assistance programs in the United States and is leading a global effort to build the zero-emission commercial vehicle market.