Tax Credits for Used Electric Honda Cars
From outstanding efficiency to effortless acceleration, it’s easy to understand the growing appeal of electric vehicles. Especially when combined with significant savings on fuel, purchasing a used EV means that you could enjoy even more perks that will help stretch your budget further than you may have imagined. Germain Honda of Beavercreek has assembled this helpful guide that explains the available used EV tax credits that you may potentially qualify for. There’s never been a better opportunity to make the switch to an all-electric vehicle!
REMINDER: If you have any questions, be sure to contact your tax professional for exact recommendations and rules related to used clean vehicle tax creditrs and vehicle eligibility.
Used EV Tax Credits & Qualifications
Beginning January 1, 2023, if you buy a qualified used electric vehicle (EV) or fuel cell vehicle (FCV) from a licensed dealer for $25,000 or less, you may be eligible for a used clean vehicle tax credit. The credit equals 30% of the sale price up to a maximum credit of $4,000.
If you do not transfer the credit, it is nonrefundable when you file your taxes, so you can’t get back more on the credit than you owe in taxes. You can’t apply any excess credit to future tax years.
At the time of sale, a seller must give you information about your vehicle’s qualifications. Sellers must also register online and report the same information to the IRS. If they don’t, your vehicle won’t be eligible for the credit.
Purchases made before 2023 don’t qualify.
Who Qualifies?
You may qualify for a credit for buying a previously owned, qualified plug-in electric vehicle (EV) or fuel cell vehicle (FCV), including cars and light trucks, under Internal Revenue Code Section 25E.
To qualify, you must:
- Be an individual who bought the vehicle for use and not for resale
- Not be the original owner
- Not be claimed as a dependent on another person’s tax return
- Not have claimed another used clean vehicle credit in the 3 years before the purchase date
In addition, your modified adjusted gross income (AGI) may not exceed:
- $150,000 for married filing jointly or a surviving spouse
- $112,500 for heads of households
- $75,000 for all other filers
You can use your modified AGI from the year you take delivery of the vehicle or the year before, whichever is less. If your income is below the threshold for 1 of the 2 years, you can claim the credit.
Qualified Vehicles and Sales
To see if a vehicle is eligible for the used clean vehicle credit:
To qualify, a vehicle must meet all of these requirements:
- Have a sale price of $25,000 or less. Sale price includes all dealer-imposed costs or fees not required by law.
- It doesn’t include costs or fees required by law, such as taxes or title and registration fees.
- Have a model year at least 2 years earlier than the calendar year when you buy it. For example, a vehicle purchased in 2023 would need a model year of 2021 or older.
- Not have already been transferred after August 16, 2022 to a qualified buyer.
- Have a gross vehicle weight rating of less than 14,000 pounds
- Be an eligible FCV or plug-in EV with a battery capacity of least 7 kilowatt hours
- Be for use primarily in the United States
The sale qualifies only if:
- You buy the vehicle from a dealer.
- For qualified used EVs, the dealer reports required information to you at the time of sale and to the IRS.
How to Claim the Credit
You can apply the Clean Vehicle Tax Credit immediately toward the amount you pay for the vehicle by transferring the credit to the dealer or you can wait and claim the credit when you file your tax return.
To transfer the credit at the time of sale, you must buy the vehicle from a registered dealer primarily for personal use (not for resale).
*Individual tax situations may vary. The information presented was accurate at time of publishing. Federal rules and tax guidelines are subject to change. Consult your tax advisor for complete details on rules applicable to your business.