You would be forgiven for thinking that support for used electric vehicles in America is crumbling around us, but in our current day and age, that’s not quite the case. Sure, President Donald Trump wants to slash tax breaks for EV buyers, but shoppers can still claim tax credits on new and used electric cars sold or leased across America.
Tax breaks on new EVs are fairly simple to claim, provided you are purchasing a qualifying EV, but the tax credits on used models can be a little more complicated. There are more stringent price requirements, a limited number of models that qualify, and stipulations on where you can buy your second-hand EV from.
To help you navigate this maze of rules, and ensure you get the best deal on a new-to-you electric car, we’ve broken down the used EV tax credit, including how to claim it and who qualifies.
Up to $4,000 towards an EV
Much like the EV tax credits available for new electric models, the used tax break offers a pretty hefty incentive to switch to electric power. For a used car, the credit is worth $4,000 or up to 30 percent of the price of the car, explains Consumer Reports. Much like the EV tax credits available for new electric models, the used tax break offers a pretty hefty incentive to switch to electric power. For a used car, the credit is worth up to $4,000 or 30 percent of the price of the car (whichever is lower), explains Consumer Reports.
When you buy a used EV, you’ll be able to apply for whichever credit amount is lower, so if you buy a model that’s less than $13,333, you’ll get the percentage credit from the government. If you find a bargain EV for around $9,000, then you’ll get $2,700 in credit, or if you find one for $19,000 then you’ll be granted the full $4,000.
Furthermore, in order to cash in the $4,000 credit, buyers must earn under a certain threshold, depending on their situation. Household income must be below $150,000 for joint filers, less than $112,500 for the head of a household, and under $75,000 if you’re buying as an individual. Unfortunately, these are lower income limits than if you were to purchase a brand new EV.
What about model year and pricing?
The next set of hoops you’ll have to jump through is all about the car you might actually want to buy, as there are a few stipulations that cut down the number of cars that qualify. First, it must be at least two years older than the current model year, so a 2023 model at the latest during the 2025 tax season.
Secondly, the sale price can’t be over $25,000, which in today’s market isn’t as big of a limiting factor as you think it may be. Right now, you can pick up fully-electric models from Tesla, Chevrolet, and Polestar that all qualify. There are also plug-in hybrid electric vehicles that qualify from the likes of Chrysler, Ford, and Jeep, provided you can buy them used for less than $25,000.
The other big stipulation is around the previous ownership of the EV. If the car was resold at least once after August 16, 2022, then it will no longer qualify for the tax credit, adds Consumer Reports. Provided all of these factors are met, you can easily receive a tax credit.
Check’s in the mail
The final qualifier is that the car you are buying must be sold through a recognized dealer. This means buying a used EV off Facebook or Craigslist will disqualify you getting the used EV credit. This does make the process of applying for the credit easier, though, as dealers are able to offer the tax credit as an instant discount on your car purchase.
If that isn’t possible, then buyers can file Form 8936, which is straightforwardly titled “Clean Vehicle Credit,” along with their tax returns. Be warned, though, that dealers will often factor the tax credit into the online pricing of their second-hand EVs. If you personally don’t qualify for the credit, this could cause a problem down the road, so be sure to read over the fine print on any car you’re interested in. Now, go forth and make the switch to electric power!
