Electric Vehicles (EVs) are fantastic, but as with any emerging technology, they can be quite expensive. Unless you’re considering something like a Chevrolet Bolt EV, you’re looking at a starting price of around $40,000. For many Americans, this price range makes owning an EV seem out of reach. This is where tax incentives and rebates come into play—they’re designed to help make EVs more affordable.
But what about used EVs? Can they still benefit from these financial incentives?
The good news is that some used electric vehicles and plug-in hybrids do qualify for rebates, though at a lower rate compared to new models. Since January 1, 2023, buyers of used EVs can take advantage of a tax credit of up to $4,000. This credit can significantly reduce the overall cost of purchasing a used EV. This initiative is part of the government’s broader plan to encourage more people to adopt electric vehicles and reduce the environmental impact of the transportation sector. By offering these tax credits, the government aims to make used EVs more affordable for a wider range of consumers, including those who can’t stretch their budgets to buy a new EV.
However, there are specific conditions and limitations to qualify for the $4,000 tax credit for used EVs, which can vary based on the vehicle model. Let’s break these down.
One key condition is the age of the vehicle. The EV or plug-in hybrid must be at least two model years old to qualify. This is to make sure that the incentive goes to genuinely used cars, not just slightly used showroom models.
Another requirement is the battery capacity of the vehicle. The EV must have a battery with a capacity of at least 7 kilowatt-hours. Additionally, the vehicle must be sold by a licensed dealer to be eligible for the rebate.
Several other conditions must also be met. The vehicle cannot have previously been used to claim this tax credit, and it must be sold for less than $25,000. Moreover, the credit can only be claimed if the manufacturer has filed the necessary paperwork for that particular model, so you’ll need to verify this with the manufacturer.
There are some personal qualifications as well. You can only claim this credit once every three years. Given that this is a new program, everyone is eligible starting from January 1, 2023. However, your modified adjusted income needs to be below certain thresholds: $75,000 for single filers, $112,500 for heads of household, and $150,000 for joint filers.
Based on these criteria, you may be eligible for a full or partial used EV tax credit.
To claim the used EV tax credit, you’ll need to file IRS Form 8936 with your tax return for the year you purchased the vehicle. You’ll also need to provide specific details, like the Vehicle Identification Number (VIN), on the form.