Used Electric Vehicle Tax Credit Overview - 2024
Used Electric Vehicle Tax Credit Overview for 2024
Like most things coming from the government and/or IRS, trying to find the accurate information you are looking for can get confusing and overwhelming. The pre-owned vehicle tax credit is no exception (it’s technically referred to as the “Used Clean Vehicle Credit”).
Especially with the model eligibility seemingly changing every week. So, in this quick article we’re going to bullet point out some of the high-level qualifications and then provide a link to exactly where you need to go on the IRS site in order to review each and every detail.
- The program began January 1st 2023
- Your used Electric Vehicle must be purchased for $25,000 or less including all dealer fees. Not including fees required by law such as taxes, title, and registration.
- It must be a model year 2 years earlier than the calendar year it was purchased in (for 2024 the newest would be a 2022)
- Vehicle must weight less than 14,000 pounds
- It must be purchased from a licensed dealer
- The credit is 30% of the purchase price up to a maximum of $4,000
- Sellers (the dealer) must register online and report the sale to the IRS
- Combined household income must not exceed $150,000 if filing jointly
- $112,500 for head of household
- $75,000 for all other filers
- Links to all details and model specific availability at the bottom of this article
Currently to claim the Used Clean Vehicle credit the buyer must complete form 8936 and file it with your tax return for the year you purchased the car. However, there is good news on the horizon (we hope). As of this writing (January 8th 2024) we are expecting the IRS to approve registered dealers to offer the tax credit to the buyer at the point of sale any day now.
This is great news for multiple reasons. For one, if you buy a used EV worth $25,000 you could only have to pay a net closing amount at the dealership of $21,000. This means you could have built in equity when you drive it off the lot and minimize your depreciation which is obviously not very common with automobile purchases in general.
Another really good benefit of this new program has to do with the challenges of finding certain model used EV’s with low to mid milage for under 25k. For example, if you’re looking for a used Tesla with a clean vehicle history report and under 100,000 miles it can be a bit challenging to find in that price point. Same goes for all of the luxury European and German brand EV’s which simply haven’t been on the market long enough to sale for under $25,000. Due to the inflation of recent years combined with well-known significantly higher new prices of EV’s compared to their counterpart ICE vehicles it seems that a $35,000 cap would have been more appropriate. Nevertheless, that’s not the case, but, you could now theoretically have the opportunity to negotiate a $29,000 used EV to $25,000 and sign over the credit to the dealer if that is allowed in the program which we’re really hoping it is.
But what if you want to buy from a private party rather than a dealer? Well under normal circumstances you wouldn’t be able to claim the tax credit. But, here at EV Bids we’re a licensed dealer and we have a solution for that. It’s no secret private party sales can be a bit intimidating with lienholder payoffs, bill of sales, exchanging of funds etc. Well, just as you would use a closing attorney to ensure a safe and secure transaction when purchasing Real Estate, EV Bids can broker your deal to make the buyer eligible for the tax credit and handle all of the paperwork to insure a safe and secure transaction for both parties. To learn more shoot us an email at info@evbids.com or give us a call at 770-756-9298.
Here is a link to the IRS Used Clean Vehicle Credit program on their website:
Here is the link to the specific model eligibility:
