Does Ford Fusion Hybrid Qualify for Tax Credit?
A used Ford Fusion Hybrid may be eligible for the Used Clean Vehicle Credit. Learn the key requirements for buyers and vehicles, including income and price caps.
Since Ford no longer manufactures the Fusion Hybrid, it does not qualify for the New Clean Vehicle Credit. The vehicle may, however, be eligible for the Used Clean Vehicle Credit. This federal incentive offers a tax credit for the purchase of a pre-owned plug-in hybrid or electric vehicle. The credit provides a financial benefit to buyers of qualifying used vehicles, making them a more accessible option.
Vehicle Eligibility Requirements
For a used Ford Fusion Hybrid to qualify for the tax credit, it must meet several conditions. The purchase price must be $25,000 or less. This price cap is the final sale price, which includes any fees imposed by the dealer but excludes government-mandated costs like sales tax and registration fees. It is the price before the application of any trade-in value that must fall at or below this threshold.
Another condition is the vehicle’s age. The model year of the Ford Fusion Hybrid must be at least two years earlier than the calendar year in which it is purchased. For instance, if you buy the car in 2025, it must be a 2023 model or older. Since the final model year for the Fusion Hybrid was 2020, any recent purchase will satisfy this requirement.
The vehicle must be acquired from a licensed dealer registered with the IRS, as private-party sales are not eligible. The buyer cannot be the original owner of the vehicle. It must also be the first transfer of the vehicle to a qualified buyer since August 16, 2022.
Buyer Eligibility Requirements
The person purchasing the Ford Fusion Hybrid must also meet personal eligibility criteria. A primary factor is the buyer’s income, which is subject to Modified Adjusted Gross Income (MAGI) limitations. For individuals filing as Single or Married Filing Separately, the MAGI must not exceed $75,000. The limit is $112,500 for Head of Household and $150,000 for couples Married Filing Jointly. A buyer can use their MAGI from either the year of purchase or the preceding year, whichever is lower.
The vehicle must be purchased for personal use, not for resale. The buyer also cannot be claimed as a dependent on another person’s tax return in the year of purchase.
A buyer is not eligible if they have claimed another Used Clean Vehicle Credit within the three-year period prior to the current vehicle’s purchase date. The credit is intended to be used once every three years.
Required Information and Documentation
Before claiming the tax credit, you must get a report from the dealer at the time of sale. The dealer is required to provide the buyer with a time-of-sale report containing information for the IRS. This document must include the dealer’s name and taxpayer identification number, the Vehicle Identification Number (VIN), the date of the sale, the final sale price, and the vehicle’s battery capacity. You must retain this report.
This information is used to complete IRS Form 8936, Qualified Plug-in Electric Drive Motor Vehicle Credit. The dealer has a corresponding obligation to report the sale to the IRS. If the dealer fails to submit this information, the vehicle will not be eligible for the credit. Buyers should confirm with the dealer that they are registered with the IRS and will complete this step.
How to Claim the Tax Credit
There are two methods for receiving the Used Clean Vehicle Credit. The traditional approach involves claiming the credit when you file your annual federal income tax return. You will use the information from the dealer’s time-of-sale report to complete Form 8936 and submit it with your Form 1040. The credit amount is 30% of the purchase price up to a maximum of $4,000, which will reduce your total tax liability.
A more immediate option allows you to transfer the credit directly to the dealer at the point of sale, acting as a down payment or instant rebate. To use this method, the dealer must be registered with the IRS Energy Credits Online portal. The buyer must complete paperwork to formally transfer the credit to the dealership.
The dealer then receives the payment from the IRS, while the buyer benefits from a lower upfront cost for the Ford Fusion Hybrid. This option provides immediate financial relief and simplifies the process for the buyer.