In the market for a used electric vehicle? Check to see if the model of vehicle you want is eligible for a tax credit here: list of qualified vehicles
Beginning January 1, 2023, if you buy a qualified used electric vehicle (EV) or fuel cell vehicle (FCV) from a licensed dealer for $25,000 or less, you may be eligible for a used clean vehicle tax credit under Section 25E of the Inflation Reduction Act equal to 30% of the sale price up to a maximum credit of $4,000.
Important: The credit is nonrefundable, so you can’t get back more on the credit than you owe in taxes, and you can’t apply any excess credit to future tax years.
Who Qualifies?
You must:
- Buy the vehicle for personal use, not for resale
- Not be the original owner
- Not be claimed as a dependent on another person’s tax return
- Not have claimed another used clean vehicle credit in the 3 years before the purchase date
In addition, your modified adjusted gross income (AGI) may not exceed:
- $150,000 for married filing jointly or a surviving spouse
- $112,500 for heads of households
- $75,000 for all other filers
You can use your modified AGI from the year you take delivery of the vehicle or the year before, whichever is less. If your income is below the threshold for 1 of the two years, you can claim the credit.
Qualified Vehicles and Sales
Vehicle must meet all of these requirements:
- Have a sale price of $25,000 or less
- Have a model year at least 2 years earlier than the calendar year when you buy it. For example, a vehicle purchased in 2023 would need a model year of 2021 or older.
- Not have already been transferred after August 16, 2022, to a qualified buyer.
- Have a gross vehicle weight rating of less than 14,000 pounds
- Be an eligible FCV or plug-in EV with a battery capacity of least 7 kilowatt hours
- Be for use primarily in the United States
The sale only qualifies if:
- You buy the vehicle from a dealer
- For qualified used EVs, the dealer reports required information to you at the time of sale and to the IRS.
Required information includes:
- Dealer’s name and taxpayer ID number
- Buyer’s name and taxpayer ID number
- Sale date and sale price
- Maximum credit allowable under IRC 25E
- Vehicle identification number (VIN), unless the vehicle is not assigned one
- Battery capacity
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