While helping the environment by reducing their carbon footprint is a big draw for many people who drive electric vehicles, the tax incentives don’t hurt either. Until 2023 the electric vehicle credit only applied to qualifying new vehicles, but with the recent changes, you can now benefit from tax credits when shopping for used cars because it’s now available on qualifying used electric vehicles.
The Clean Vehicle Credit in 2023
Some changes to the electric vehicle credit for 2023. Starting with the name. Instead of the Qualified Plug-In Electric Vehicle Credit, it’s now called the Clean Vehicles Credit. Along with this change, there is also a new credit for Previously Owned clean vehicles. Starting on January 1, 2023, qualified used electric vehicles purchased from a licensed dealer for $25,000 or less may be eligible for the clean vehicle tax credit. The available credit is for 30% of the sale price, with a maximum of $4,000.
Do You Qualify?
The credit sounds great, doesn’t it? But there are some restrictions. In order to qualify, you can’t be the original owner of the vehicle, you have to buy the vehicle for use and not for resale, and you can’t be a dependent on someone else’s tax return. This means that if your parents still claim you as a dependent, you will not qualify for the credit. The credit is only available if you haven’t claimed another used clean vehicle credit in the past three years.
Your income is also a factor in determining if you qualify. You can’t make over $150,000 on a joint return or $112,500 as the head of household. Single filers can get the credit if they make under $75,000.
Do All Used EVs Qualify?
The changes to the tax credit rules are a good news, bad news situation. Used vehicles now qualify, but there are certain requirements that need to be met in order for the buyer to get the credit. The sale price needs to be $25,000 or less, and it has to be at least two years old. The credit is only available for vehicles that weigh under 14,000 pounds, and it has to be a plug-in EV or fuel cell vehicle with at least a 7 kWh battery. If you buy an electric vehicle in a private sale, you’ll miss out on credit, so if you’re shopping for used cars, make sure to go to a dealer.
A Used Electric Vehicle Could Be Your Best Bet in 2023
If you typically shop for used cars instead of new ones, the revamped federal tax credit makes it more affordable than ever to go electric. The rules are more complicated than ever, but now that we’ve broken them down for you, and you have an idea of what you can get in order to qualify, it’s time to start shopping. The good news is that is a list of qualifying vehicles, so if you want to make sure it qualifies before buying, it’s all there in black and white.
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