Previously Owned Clean Vehicle Credit 25E

A credit for buyers of used clean vehicles.

The 25E tax credit can be used if you buy a qualified used electric vehicle (EV) or fuel cell vehicle (FCV) from a licensed dealer for $25,000 or less. The vehicle must be over two years old, previously not have been resold after August 16, 2022, and meet other technical criteria.

The credit equals 30% of the sale price up to a maximum credit of $4,000.

To qualify, you must:

• Be an individual who bought the vehicle for use and not for resale.
• Not be the original owner.
• Not be claimed as a dependent on another person's tax return.
• Not have claimed another used clean vehicle credit in the 3 years before the purchase date.

In addition, your modified adjusted gross income (AGI) may not exceed:

• $150,000 for married filing jointly or a surviving spouse.
• $112,500 for heads of households.
• $75,000 for all other filers.

The 25E credit is available for purchases on or after January 1, 2023, through 2032.

You may claim the credit when you file your tax return, or you can transfer your credit to a registered dealer at the time of sale to reduce the amount you pay during purchase.

• Check to see if the vehicle you are interested in purchasing qualifies.
• Purchase your vehicle.
• Get a paper copy of the time-of-sale report when you complete your purchase from the dealer.
• You can claim the credit two ways: on your own taxes or by transferring it to a dealer.
• To claim the credit when you file your taxes, submit Form 8936 when you file your tax return for the year in which you take delivery of the vehicle.
• You can also transfer the credit to the dealer when you purchase the vehicle to claim the incentive right away and get a reduction off the purchase price. To do so, follow the dealership’s instructions.

Visit the federal website irs.gov for more details on what qualifies and how to use the credit.