Credit for Previously-Owned Clean Vehicles 25E

What qualifies

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 and meet other technical criteria.

Incentive value

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

Who is eligible

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

When the credit is available

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

How to claim the credit

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.

  1. Check to see if the vehicle you are interested in purchasing qualifies.
  2. Purchase your vehicle.
  3. Get a paper copy of the time-of-sale report when you complete your purchase from the dealer.
  4. You can claim the credit two ways: on your own taxes or by transferring it to a dealer
    1. 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.
    2. 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 here for more details on what qualifies and how to use the credit.

Disclaimer: None of the information presented on this website should be considered official legal or financial advice. Please contact a licensed tax professional for additional information.