Save Big on Your Next Used EV: Government Introduces New Tax Credit

The U.S. government has reintroduced a $4,000 tax credit for used electric vehicles as part of the Inflation Reduction Act passed in August, which applies to certified pre-owned Evs that meet certain eligibility criteria. This credit is different from previous years, as manufacturers like Tesla and General Motors are no longer exempt from the credit after reaching 200,000 deliveries, as per a report by Screenrant on January 24, 2023.

The IRS has a list of eligible electric vehicles from various manufacturers that can qualify for a tax credit, with guidelines on the IRS website. To qualify, the vehicle must be for personal use, the buyer must not be the original owner, and the buyer’s modified adjusted gross income should not exceed certain limits.

Used Evs must also meet certain prerequisites to be eligible for the creditThey must be purchased for $25,000 or less and driven primarily on U.S. roads, and have a model year two years before the calendar year they were purchased. The sale becomes eligible when the dealer shares the required information with the buyer and the IRS. To claim the used clean vehicle credit, Form 8936 must be filed alongside the tax return for the year in which the vehicle was delivered. Drivers should include the EV’s VIN when applying, according to Ars Technica on January 6, 2023.

While new electric vehicles are in high demand, certified pre-owned models are also worth considering given their eligibility for a tax credit. Prospective buyers are advised to discuss purchases with a qualified tax professional to get a clear understanding of how the credit works. More models are expected to be added to the list of eligible Evs in the future.