Since 2023, qualified used electric vehicles have been eligible for a federal tax credit for up to 30% of the sale price or $4,000, whichever is lower. This is significantly less than the $7,500 maximum credit for a new EV, but it presents an opportunity to get a bargain on a low-mileage used vehicle. For any car that costs more than $17,501, it is a better deal than the new EV incentive. To qualify for the Used Clean Vehicle Tax Credit, a car must be an electric vehicle of a model year at least two years prior to the year in which it is purchased and must be purchased all-in for $25,000 or less.
In addition to the vehicle requirements, the purchaser must meet gross income requirements— $150,000 or less in adjusted gross income in the previous year for joint filers and surviving spouses, $112,500 or less for heads of household, and $75,000 or less for other filers. Crunching the numbers reveals that the Nissan Leaf, Chevrolet Bolt EV, Hyundai Kona Electric, Mini Cooper SE Hardtop, and Mazda MX-30 are the cheapest all-in 2022 model year EVs. The Nissan Leaf stands out as the most affordable option with a $15,828 before-credit estimated sale price.
If range is a deciding factor, the 2022 Lucid Air offers an impressive 446-mile range. However, it comes with a higher price tag, making the $4,000 used EV credit may do little more than finance new floor mats. With the used EV market expanding and the federal tax credit in place, buyers have the opportunity to secure a cost-effective and eco-friendly vehicle. The new car price need only be more than $17,501 for it to be a better deal in the used market considering the $4,000 federal tax credit.
Overall, the expansion of the used EV market, coupled with the federal tax credit, offers a great opportunity for buyers to find a cost-effective and environmentally friendly vehicle. By taking advantage of the Used Clean Vehicle Tax Credit, buyers can save on the purchase of a qualifying used electric vehicle. With the increasing availability of used EVs meeting the requirements, more buyers can benefit from the tax credit and contribute to a more sustainable future. The federal tax credit for used EVs presents a viable option for those looking to purchase an electric vehicle at a lower cost.
