You may be eligible for a tax incentive if you buy a used EV in the US. The Used Clean Vehicle Tax Credit was introduced in the Inflation Reduction Act of 2022, and it allows eligible taxpayers to claim a credit of up to $4,000 for the purchase of a used EV that meets certain criteria.

To be eligible for the credit, the used EV must:

• Be a plug-in electric vehicle or fuel cell vehicle
• Have a battery capacity of at least 7 kilowatt hours
• Be purchased from a licensed dealer
• Cost $25,000 or less
• Be the first transfer of the vehicle

The credit is equal to 30% of the purchase price of the vehicle, up to a maximum of $4,000. The credit is non-refundable, so you can only claim it if you owe at least $4,000 in federal income taxes. You can claim the credit on your federal income tax return. The credit will be applied to your tax liability and any excess credit can’t be carried forward to future tax years.

Here are some additional things to keep in mind about the Used Clean Vehicle Tax Credit:

• The credit is only available for used EVs purchased on or after January 1, 2023.
• Must be a model year at least 2 years earlier than the calendar year when you buy it.
• You can only claim the credit once every three years.
• Have a gross vehicle weight rating of less than 14,000 pounds
• The credit is subject to income limits. Single filers with an adjusted gross income (AGI) of $75,000 or more, head of household filers with an AGI of $112,500 or more, and married couples filing jointly with an AGI of $150,000 or more are not eligible for the credit.

Will I get a tax incentive if I buy a Used EV in the US if I buy from an auction?

Yes, you can still get a tax incentive if you buy a used EV in the US from an auction. The IRS defines a “licensed dealer” as any person who is in the business of selling cars. This includes dealers who sell vehicles at auction.

There are a few things to keep in mind if you buy a used EV from an auction:

• The vehicle must still meet all of the eligibility requirements for the Used Clean Vehicle Tax Credit.
• You must be able to provide documentation to the IRS that the vehicle was purchased from a licensed dealer.
• You may need to pay a state sales tax on the vehicle, even if you bought it at an auction.

If you’re considering buying a used EV from an auction, I recommend that you contact the auction house to see if they can provide you with documentation that the vehicle was purchased from a licensed dealer.

KNOW YOUR ELIGIBILITY! It could make a difference in your vehicle purchase!

Go electric ✌️

Form 8936: https://www.irs.gov/pub/irs-pdf/f8936.pdf

Information sources:

• Used Clean Vehicle Tax Credit | Internal Revenue Service: https://www.irs.gov/credits-deductions/used-clean-vehicle-credit
• Used EV Tax Credits and Which Cars Are Eligible Today | Recurrent: https://www.recurrentauto.com/research/used-ev-tax-credits
• Here are all the used EVs that qualify for the new $4,000 tax credit | Electrek: https://electrek.co/2023/06/22/here-are-all-the-used-evs-that-qualify-for-the-new-4000-tax-credit/