Previously owned electric vehicles are now eligible for tax credits beginning in 2023, subject to rules and limitations
Previously owned vehicles: The Previously Owned Clean Vehicle Credit under IRC §25E, is available for the purchase of used clean vehicles by qualified buyers with modified AGI below specified levels. The credit is available for qualified vehicles purchased after December 31, 2022, and before 2033. Only sales by a licensed dealer of vehicles sold for $25,000 or less qualify for the credit. In addition, only the first resale of the vehicle qualifies. The credit is equal to 30% of the vehicle’s sales price, up to a $4,000 maximum credit.
Miscellaneous rules: To qualify for this credit: 1)The vehicle’s model year must be at least two years earlier than the calendar year in which it was purchased; 2) The original use of the vehicle must not have commenced with the taxpayer. Used car dealers will be able to identify to the buyer which vehicles qualify for the credit because they must provide credit information concerning the vehicle to the IRS. Buyers may only claim the credit for purchases once every three years. Beginning with vehicles acquired after 2023, purchasers may transfer the credit to the dealer.
Taxpayers are eligible for the credit if their modified AGI equals or is less than the following amounts in either the current or the prior tax year:
• $150,000 for MFJ;
• $112,500 for HOH; or
• $75,000 for all other taxpayers