The federal tax credit can also be claimed by buyers of certified pre-owned electric vehicles, provided they fulfill the eligibility criteria. Last August, the U.S. government passed the Inflation Reduction Act (IRA), which ushered in new guidelines and eliminated some old ones. One of the changes was the reintroduction of the incentive for automakers like Tesla and General Motors. Both automakers were previously exempt from the tax credit since they had crossed 200,000 deliveries.
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The IRA offers up to $4,000 in tax rebates for used electric models, provided that they satisfy certain requirements. The qualifying EVs include the Audi e-tron (2019, 2021, and 2022), Audi e-tron GT (2022, 2023), Audi e-tron S standard and sport back models (2022), Audi e-tron Sportback (2022, 2021, and 2022), Audi Q4 e-tron Quattro standard and Sportback trims (2022), Mini Cooper Electric (2020, 2021), Ford Mustang Mach-E (2021), Hyundai Kona Electric (2019, 2022, 2021), BMW i3 sedan (2013 through 2021), Nissan Leaf, Toyota RAV4 EV (2012 through 2014), and the Volkswagen ID.4. Interested buyers can visit the IRS website to find qualifying plug-in and hybrid models. More models are expected to be added soon.
Related: How To Claim EV Tax Credit
Eligibility Criteria For Used EVs
While new EVs are in high demand, certified pre-owned models are also worth the interest given their eligibility for a tax credit. It's advised that prospective buyers discuss purchases with a qualified tax professional to get a clear understanding of how this works. The IRS also provides a comprehensive list of guidelines that drivers must meet before claiming the credit. To qualify, claimants must have acquired the EVs only for personal use. Additionally, they must not be the vehicle's original owner, or have applied for and received a tax credit within the last three years.
Buyers' modified adjusted gross income (AGI) should not surpass $75,000 for individuals, $112,500 for heads of households, and $150,000 for joint filers or surviving spouses. The IRS allows applicants to use either the AGI of the year when the EV was delivered or the year before. Used EVs must also fulfill certain prerequisites to guarantee eligibility. They must be bought for $25,000 or less, be driven mainly on U.S. soil, be acquired from an approved dealer, have a gross vehicle weight rating of below 14,000 lbs, and have a model year two years before the calendar year they were purchased.
The IRS adds that the sale becomes eligible when the dealer shares the required information with the buyer and the agency. To claim the used clean vehicle credit, Form 8936 also known as Qualified Plug-in Electric Drive Motor Vehicle Credit (Including Qualified Two-Wheeled Plug-in Electric Vehicles and New Clean Vehicles), must be filed alongside the tax return for the year in which the vehicle was delivered. When applying, drivers should include the EV’s VIN.
