3/5/2024
Learn how to save big on used electric vehicles with the used EV tax credit.
Peter Glenn
Gas prices continue to fluctuate. Environmental concerns continue to grow. And the speed, safety, and performance of electric cars continue to get better and better.
With so many reasons stacking up, it’s no wonder so many drivers are looking to make the switch and add to the nearly 2.5 million electric vehicles registered in the United States today.
However, the high sticker prices of new EVs are still giving some drivers cold feet. And it’s true—despite all the money you’ll save in the long term on fuel costs, the sticker price of the average EV still costs a few thousand more than the average gas-powered car (though that number is going down).
Thankfully, the new federal EV tax credit guidelines for used EVs and used fuel cell vehicles could make owning an electric car a reality for more drivers in 2024.
Starting January 1, 2024, purchasers of qualifying used EVs can now receive a Clean Vehicle Tax Credit of up to $4,000 through a point-of-sale rebate when buying from participating dealerships, regardless of tax liability. This game-changing EV tax credit offers drivers an enticing opportunity to go electric without the premium price tag.
With the average MSRP in 2024 still higher for new electric vehicles than their gas-powered counterparts, the used EV tax credit offers budget-conscious buyers a much more cost-effective path to electric driving. Lightly-used EVs can provide the latest technology, advanced performance, and ample range while avoiding the dreaded steep depreciation of a new vehicle.
A major draw is that the used credit applies to a wide array of battery-electric and plug-in hybrid models sold by dealers for under $25,000. From the practical Chevy Bolt and Nissan Leaf to the coveted Tesla Model 3 and Tesla Model S, many affordable EV options could qualify for the substantial $4,000 discount when purchased used.
When buying an eligible used EV or fuel cell vehicle from an enrolled dealer, the clean vehicle credit allows for a point-of-sale rebate covering up to 30% of the purchase price, with the tax credit savings being capped at $4,000. So, for example, on a $12,000 used Nissan Leaf, buyers could see up to a $3,600 discount. For a $20,000 Tesla Model 3, drivers could receive the maximum credit of $4,000.
To receive the credit, the Internal Revenue Service stipulates that the sale must be completed through a licensed dealer participating in the program—not a private party sale. During the purchase, the dealer enters vehicle details (such as the vehicle’s identification number, model year, gross vehicle weight rating, and the vehicle's purchase price) into an IRS portal to validate eligibility and certify the rebate amount being passed to the buyer.
The qualified buyer then enters their information, including proof of income, to confirm they meet the qualification criteria. This streamlined process allows the rebate to be applied on the spot rather than waiting to claim the credit when filing taxes the following year.
To qualify for the used EV tax credit rebate, buyers must fall under the following modified adjusted gross income (AGI) limits based on their latest tax return:
The AGI total can be found on line 11 of Form 1040 and includes wages, interest, dividends, capital gains, and other income sources for most filers.
Additionally, the used EV must be purchased solely for personal use rather than business purposes. The buyer cannot have claimed the credit in the previous three years or intend to resell the vehicle.
Beyond the income restrictions, used EVs are only eligible if sold from a participating dealer for $25,000 or less. The vehicle must also meet the following criteria:
It's important to note that eligibility hinges on the actual sale price at the dealer, not the vehicle's original MSRP when new. This means higher trim levels of models like the Chevy Bolt EV/EUV, Hyundai Kona Electric, and Tesla Model 3 could fall under the $25,000 ceiling once they've depreciated after a couple of years on the road.
The good news is that many of these affordable used options still deliver thoroughly modern battery specs and substantial driving range. The Chevy Bolt, for instance, has an EPA rating of 259 miles of range, making it one of the most affordable EVs per range mile.
And yes, used Tesla models are on the table, too, if they meet the pricing, age, and other eligibility requirements at the point of sale. Some used Model 3 vehicles and even older versions of the Model S and Model X could be eligible for the $4,000 discount if the numbers line up properly.
This is the list of used EVs that currently qualify for the Used EV tax credit, as of 4/22/24:
While the up to $4,000 federal rebate can make used EV ownership far more affordable, financing can help you maximize the overall savings potential. An EV Climate Loan from EV Life offers attractive rates and affordable payments tailored for budget-conscious used EV buyers.
Working with top national lenders, EV Life can secure competitive financing terms and ensure you receive the full benefit of all eligible rebates and incentives. Our EV financing experts will facilitate the process of applying all available electric vehicle tax credits, rebates, grants, and incentives at the time of purchase so you're not waiting months to receive your money.
Here’s how it works:
Between the generous $4,000 federal tax credit, available state/local rebates, and smart financing from EV Life, there's never been a better opportunity to purchase a used electric vehicle. Get behind the wheel of your dream zero-emissions ride while taking full advantage of the money-saving incentives—saving the planet while saving your pocketbook.
Get pre-qualified today to discover how much you could save on your used EV.
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