Used Electric Car Tax Credits Explained for 2024(USA)

By Renee Valdes 03/14/2024 8:00am

Shoppers considering a used electric vehicle (EV) costing less than $25,000 could obtain up to a $4,000 tax credit. The Clean Vehicle tax credit is available to buyers within certain federal income limits, but the credit comes with other restrictions, like buying a vehicle from a used car dealership. Here’s what else you need to know.

What Are the Used Electric Car Tax Credits

The Internal Revenue Service (IRS) defines the Clean Vehicle tax credit for used vehicles as a credit that equals 30% of the sale price up to a maximum credit of $4,000. Besides fully electric vehicles, plug-in hybrids, and fuel cell vehicles in California may qualify. The sale price must be less than $25,000. See below for the other restrictions and how to qualify for the used EV tax credit.

• To qualify, used cars must be at least two model years old.
• The vehicle also must be purchased at a dealership.
• The EV only qualifies for a tax incentive once in its lifetime.
• Used buyers can only qualify for one EV tax credit every three years.
• Individuals must meet income requirements (see below) and not be claimed as a dependent on any other person’s tax form.
• The used electric vehicle must have a gross vehicle weight rating (GVWR) of less than 14,000 pounds.
• The credit ends in 2032.

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Source: IRS

Note that if you purchase a qualifying used electric vehicle, make sure the dealership provides a copy of the “time of sale” document because it confirms they submitted the paperwork on the vehicle to the IRS. The Clean Vehicle tax credit is not an instant rebate at the time of purchase. The buyer must file an IRS tax form 8936 and follow the instructions.

RELATED: Electric Car Rebates and Incentives: What to Know by State

To find out which used electric vehicles qualify, check with the IRS website. To see what new vehicles qualify, read our article on how electric car tax credits work for 2024. As with any used car purchase, check the value of the vehicle you want to buy to determine your negotiation wiggle room. Additionally, get a vehicle history report before buying and understand the life left in the EV battery and its warranty. See our electric car guide to learn more.