DIY Tax Credit Checker for Used EVs:

You're shopping for the used EV of your dreams and you think you found the one. Are you able to apply the $4,000 rebate to lower the purchase price even more? Here's a checklist to help you understand the ins-and-outs of tax policy - painlessly.

Are you eligible?

If you're hoping to buy a used EV with the help of the federal rebate or end-of-year tax credit, you'll need to see if you qualify. This depends on your adjusted gross income and a few other factors.

1. You can only use this credit once every three years.

2. Income requirements: max adjusted gross income (AGI) of $75,000 for single filer, $150,000 for joint filers, $112,500 for head of household. You may use the current year or the previous year’s tax returns. You can check your AGI in the following places:

•       Form 1040, Line 38
•       Form 1040A, Line 21
•       Form 1040EZ, Line 4

3. Is this car purchase for personal, non-commercial use? You cannot plan to resell the car, you cannot be the original owner of the vehicle, and you cannot be claimed as a dependent on anyone else's tax credit. 

4. Dealers must report the sale into the IRS portal at the time of the sale, and provide you with proof of qualification. If a dealer does not have access to the IRS portal or does not want to process the sale with you there - be careful! 

Is the car eligible?

Now that you've made sure you're eligible for the tax credit, it's time to check if the car you love is, too.

In order to qualify, a vehicle must:

1. Be at least two models years old (2023 and earlier).
2. Have a battery with at least 7kWh — that’s mostly all plug-in cars!
3. Be sold by a licensed dealer that is regisistered with the IRS.
4. Be sold for less than $25,000.

The car cannot:

5. Have been resold to an individual after 8/16/2022, regardless of whether the tax credit was claimed. The dealership can verify this for you. 
6. Have already been used to claim this credit.

Remember that this best way to "max out" the value of the tax credit is to find a dealer who is enrolled in the time-of-sale rebate program and use the $4,000 when you purchase! Otherwise, your refund will be limited to your tax liability for the year, so you may not get the full value.

How have the tax credits affected the EV market?

The used EV market blossomed in 2024 with tax credits that could be applied at time of sale. Both new and used sales hit records, with 97% of leases and 81% of new EV purchases taking advantage of a tax credit. By mid year, the incentives had helped 250,000 Americans get into an electric car. This number will likely double by year end. 

The EV tax credit was also the demand-side stimulus for $223 Billion in investments in domestic EV and battery manufacturing. The largest investments are by American companies - Ford, GM, and Rivian, followed by Toyota, LG, and Hyundai. This growing EV industry is set to employ 232,000 people, 176,000 of whom are in Republican districts. These investments hinge on the incentives and requirements put for in the IRA, and the demand that the tax credits create. 

Going into 2025, the forthcoming presidential administration is promising to repeal these tax credits, against the wishes of the auto industry and innovation groups, all of which have made heavy financial and corporate commitments to electric vehicles. 

But before the tax credits are revoked, you can expect interest in EVs to remain high as people who had been putting off their purchase rush to get under the wire.

What happens if EV tax credits go away?

Even without the incentives, EVs aren’t going anywhere. Estimates are that 70-75% of EV purchases will still happen without tax credits, and there are a host of state and local incentives that will help shoppers out. Plus, current EV drivers are very loyal to electric cars, with 77%-89% of them reporting that their next car will also be electric, depending on source. 

That means that there are around 4.8 million future EV drivers, just based on past sales numbers. 

However, future EV sales will slow without the popular tax incentives, with American made vehicles being hit the hardest. Used EV prices may also become unpredictable, at least until 2026 when a wave of lease returns hits the market with an influx of new inventory. 

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How to use point-of-sale rebates today

For the near future, the new and used EV tax credits are here and it’s a great time to use them to get into a new-to-you electric car. Early 2025 is a great time to find bargains on 2023 model year vehicles, such as the Hyundai Kona, Nissan Ariya, or a bargain-priced Chrysler Pacifica Hybrid. A Chevrolet Bolt EV or a Nissan LEAF can be had for well under $20K.

Eligible shoppers may “transfer” the full value of the tax credit to a dealership to use as a point-of-sale discount on a qualifying vehicle. A built-in $4000 rebate or down payment on a used EV is a big incentive!

What's the catch?

The purchase must go through a dealership that has registered with the IRS. This is true for a new or used EV, and whether you use the credit at the time of sale, or at the end of the year.

At the time of the sale, you and the dealer will enter information into the IRS portal which will be able to automatically accept or reject the transaction. The dealership should provide you with confirmation right there. 

For more on vehicle and buyer eligibility, see below. 

Which used electric cars are eligible for tax credits?

Starting in 2025, the biggest crop of used EVs ever will become eligible for the tax credits as 2023 model year cars qualify. 

Around 30% of all used EV listings should qualify for the tax credit based on price, and a lot of these are great finds. Here are some deals you can find (or negotiate) for point-of-sale rebates at dealerships.