How to get a Used Tesla (or other EV) under $20k with a $4k Used EV Tax Credit

In 2023, a record 1.2 million Americans bought new EVs, but 2024 may be the breakout year to buy a used EV.

On January 1st, the IRS enabled a new $4,000 Federal Used EV Tax Credit to be deducted point-of-sale at dealerships, making the prices for used EVs potentially the lowest they’ve ever been. However, to get the used EV tax credit, vehicles need to be under $25,000.

It was hard to find a used Tesla or other used EV for under $25,000–until rental car giant Hertz announced this January that they are putting 20,000 Teslas (and other EVs) up for sale. You can now get a Tesla Model 3 for as little as $14,000.

With the combination of a $4,000 used EV tax credit and an abundance of used Tesla and other EVs on the market, experts are forecasting that used EV sales will grow over 40% this year to nearly 600,000 used EVs sold.

Also, used EV are retaining a surprising amount of range. According to research by Recurrent Motors, a Seattle based battery analysis company, EVs retain a surprising amount of battery range–with over 90% of their range at 100,000 miles.

However, if you’re looking to buy a used EV, there are still challenges still to overcome like determining whether you qualify for the $4,000 tax credit based on your adjusted gross income, and what other state or local rebates could you qualify for.

Also, with a low number of used EV dealers registered with the IRS, securing the $4,000 tax credit will not be as straightforward as receiving credits for a new EV purchase.

Here’s our official guide to saving time and money on getting a Used EV:

Step 1: Check if your income qualifies for the $4,000 Used EV tax credit

Before you start your used EV search, it’s important to know whether you can qualify for the Used EV Tax Credit.

To qualify, your adjusted gross income (AGI) from your taxes needs to be below:

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

Step 2: If you’re income qualified, read up on Used EV Tax Credit terms.

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

Your Used Vehicle must be:

• Model year at least 2 years old.For example, if vehicle is purchased in 2023, the model of vehicle needs to be 2021 or older
• Battery capacity of least 7 kilowatt hours
• Total sale price of $25,000 or less. Sale price includes all dealer-imposed costs or fees not required by law. License, taxes, title, and registration fees are not included in the total purchase price.

Other requirements:

• 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

To read up on all the eligibility requirements for the Used Clean Vehicle tax credit, visit Used Clean Vehicle Credit or contact your dealer directly.

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Step 3: Search online for a Used EV in your price range.

If you qualify for the Used EV Tax Credit, try searching popular car sites for search terms like “Used Teslas under $25,0000”:

• TrueCar: Used Teslas Under $25,000
• Cars.com: Used Teslas Under $25,000

Note: If you do not qualify for the Used EV Tax Credit, the $25,000 search cap is unnecessary. Just choose a budget that works for you.

Step 4: Contact dealers to ask if they’re registered with the IRS to pass through the $4k EV Tax Credit

Once you find used EVs that you would like to buy, check the listing for mention of being able to get the $4,000 tax credit “at point of sale” or “like an instant rebate.”

Unfortunately, because the IRS just launched its program on January 1st, the majority of used auto dealers are not registered for the IRS program yet. There’s been some slowness between dealers needing to register and IRS approvals of dealer registrations.

Most dealerships will likely register with the IRS by end of this year, However, if you want to buy now and cannot find a dealer to pass through the $4,000 tax credit, EV Life can also give you the option to defer their $4,000 tax credit like an additional down payment that reduces your monthly loan payments.

How EV Life’s Climate Loan for Used EVs reimagines auto financing for the unique needs of EV buyers:

• When you pre-qualify for financing with EV Life, we offer the very best interest rates, backed by a rate matching program.
• Our EV Life’s Incentive Engine, which also powers incentive calculations for Nissan and Toyota, enables consumers to qualify for their maximum tax credits and rebates from the government and utilities. It also offers borrowers exclusive access to “TurboTax-style” incentive filing tools.
• Our customer support team helps you find dealers registered with the IRS to pass through the $4,000 tax credit as a point-of-sale discount. If no dealer can be found, EV Life gives you the option to defer their $4,000 tax credit like an additional down payment that reduces your monthly loan payments.
• If you want to install a home charger, EV Life enables you to get an instant binding quote for charger installation (which can cost $1000-$2500) and bundle it into your EV Life loan–further reducing the upfront cost of driving electric.