SECTION 3. SAFE HARBORS

.01 Incremental cost of a qualified commercial clean vehicle .

(1) The DOE’s January 2025 Report provides a modeled incremental cost analysis based on current costs across several classes of clean vehicles. For any qualified commercial clean vehicle not previously placed in service by another person or entity, the IRS will accept a taxpayer’s use of the modeled incremental cost published in table ES-2 in the DOE’s January 2025 Report for the appropriate class of clean vehicle to establish the incremental cost of a qualified commercial clean vehicle placed in service by the taxpayer on or after January 1, 2025. An incremental cost established under this section 3.01(1) is used to identify the lesser of (1) 15 percent of the taxpayer’s basis in the vehicle (30 percent in the case of a vehicle not powered by a gasoline or diesel internal combustion engine), or (2) the incremental cost of the vehicle for purposes of section 45W(b)(1).

(2) For any qualified commercial clean vehicle previously placed in service by another person or entity, the IRS will accept a taxpayer’s application of the modeled incremental cost of the qualified commercial clean vehicle when new, as determined by reference to the IRS safe harbor guidance that corresponds to the model year of such vehicle, ⁵ to the rules found in proposed §1.45W-2(f) of the proposed regulations

to establish the incremental cost of such qualified commercial clean vehicle. Proposed §1.45W-2(f)(1) provides that the incremental cost of a qualified commercial clean vehicle previously placed in service by another person or entity is the product of the incremental cost of the qualified commercial clean vehicle (that is, the incremental cost of such vehicle when new) and the residual value factor that corresponds to the age of the qualified commercial clean vehicle as described in that section. An incremental cost established under this section 3.01(2) is used to identify the lesser of (1) 15 percent of the taxpayer’s basis in the vehicle (30 percent in the case of a vehicle not powered by a gasoline or diesel internal combustion engine), or (2) the incremental cost of the vehicle for purposes of section 45W(b)(1). A taxpayer may use the safe harbor in this section 3.01(2) with respect to any qualified commercial clean vehicle placed in service by the taxpayer after December 31, 2022. .02 Retail price equivalent . The DOE’s January 2025 Report provides the RPEs used by the DOE for purposes of modeling incremental cost across several classes of clean vehicles. In cases where taxpayers do not use a modeled incremental cost safe harbor, such as those provided in section 3.01 of this notice, the IRS will accept taxpayers’ use of the RPEs published in table 4 of the DOE’s January 2025 Report for the appropriate class of clean vehicle to calculate the incremental cost of qualified commercial clean vehicles. A taxpayer may use the safe harbor in this section 3.02 with respect to any qualified commercial clean vehicle placed in service by the taxpayer after December 31, 2022.