Used EV tax incentive (25E)

The 25E used electric vehicle tax incentive makes it more affordable for Americans to buy a used electric vehicle (EV). You can claim this incentive if you are eligible and purchase your used vehicle from a registered dealership.

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Disclaimer: The information presented here is for educational purposes only. It is not intended to provide specific tax guidance. For questions regarding your individual tax situation, we suggest consulting with your tax advisor.

Tax Credit

Up to $4,000

Available now

Starting in 2024, this credit can be transferred to dealerships in exchange for a point-of-sale discount, reducing the amount you pay the dealership at purchase.

What is the 25E used EV tax incentive?

The used EV tax incentive provides a discount of 30% up to $4,000 off the sale price of a used EV purchased from a registered dealership.

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The 25E Used EV Tax Incentive provides up to $4,000 toward used EVs—including cars, SUVs, and light duty trucks—with a sale price of $25,000 or less.

Eligibility depends on vehicle type and income. To determine eligibility and help you find a used vehicle that qualifies for the tax credit, we’ll list all the factors you need to know. 

If you’re looking into buying a new EV, check out our breakdown of the 30D tax incentive instead. 

Used EVs must meet multiple requirements in order to qualify for this incentive, so make sure you talk with your car dealer before you make a purchase. They’re required by law to provide you with the information you need to ensure your EV purchase qualifies. 

You can find a complete list of the information your car dealer must provide on the IRS website.

Individuals and households that meet income requirements

Used EV purchases are subject to income caps based on income tax filing status. Those caps are:

  • $150,000 for married filing jointly or a surviving spouse

  • $112,500 for heads of households

  • $75,000 for all other filers

If you fall at or below the income cap for your category, you're eligible for a 25E tax incentive!

To make sure that the EV you want to purchase qualifies for this tax incentive, talk to your dealer before making a purchase

If you’re interested in learning about requirements that used EVs must meet, we’ve broken them down below:

Qualifying used EVs must certain requirements

To qualify for the 25E tax incentive, a used EV must meet the following requirements:

  • Have a sale price of $25,000 or less before additional fees

  • Be purchased from a registered dealer. Private car sales (direct from owner to buyer) are not eligible.

  • Have a model year two or more years earlier than the calendar year in which your vehicle purchase is made. For instance, to use the 25E tax incentive for a vehicle purchased in 2024 the model year must be 2022 or older.

  • Weigh less than 14,000 pounds

  • Have a battery capacity of least 7 kilowatt hours

  • Be for use primarily in the United States

  • Not have been previously resold after August 16, 2022 

  • Come from a qualified manufacturer

Some used EVs meet these requirements, and some don’t. So, how do you know which used EV models you can purchase to qualify? 

The best way to know is to talk with your car dealer before you make a purchase. They’re required by law to provide you with the information you need to ensure your EV purchase qualifies. You can find a complete list of the information your car dealer must provide on the IRS website.

This incentive has changed for 2024. If you purchased a car in 2023, you need to file Form 8936 when you file your taxes. You will then receive either a lowered tax bill or a larger refund, though for 2023, the 25CE tax credit is “non-refundable,” which means that you can't get back more than you pay in federal income taxes. 

If you purchase a car in 2024 and onward, the discount will be upfront, but you’ll still need to file Form 8936 when you file your taxes. 

Here are all the steps you need to take to save on your used EV purchase:

  1. Verify with your registered car dealer that you meet income requirements and your used EV meets the requirements. Ask to see official documentation verifying your car dealer and used EV’s eligibility.

  2. Tell your car dealer that you’d like to use the 25E used EV tax incentive to either reduce the purchase price of the vehicle or receive cash back, depending on your dealership’s options.

  3. When completing the sale of your used EV, your car dealer will electronically submit information verifying the transfer, including a time-of-sale report. They’ll also provide you with written confirmation that your used EV qualifies and the credit amount it qualifies for. 

  4. Enjoy your used EV! 

  5. Fill out and include IRS Form 8936 (including your VIN) to show that you claimed the 25E Used EV tax incentive and submit it with your federal tax return. 

Note: If you use the 25E rebate but are not eligible for it, you will be required by the IRS to pay it back when you file your tax return. 

Be sure to review this information from the US Department of the Treasury to ensure you follow the right steps for the year in which you’re claiming the 25E tax incentive.

Discover other incentives with the incentives calculator!

There are other incentives that you may qualify for. Our incentive calculator will show you a personalized list of incentives.

Go to Incentive Calculator

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