How to Claim the Used EV Tax Credit on Your Tax Return

Buying a used electric vehicle (EV) can be more affordable with a federal tax credit. The IRS offers an incentive for qualifying purchases, allowing eligible buyers to reduce their tax liability. However, claiming this credit requires understanding specific rules and following the correct steps when filing your tax return.

To qualify, it’s important to know the necessary documentation, income limits, and how to properly claim the credit.

Eligibility Criteria

The used EV tax credit applies only to vehicles that meet IRS requirements. The car must be at least two model years old at the time of purchase and bought from a licensed dealer—private sales do not qualify.

The sale price cannot exceed $25,000 before taxes and fees. The vehicle must have a battery capacity of at least 7 kilowatt-hours and be designed for public road use. Low-speed vehicles, such as golf carts, are ineligible.

Only individual taxpayers can claim the credit—businesses and organizations are excluded. The credit is non-refundable, meaning it can reduce tax liability to zero but will not generate a refund if it exceeds the amount owed.

Documentation Requirements

Claiming the used EV tax credit requires submitting specific documents to verify the purchase and meet IRS regulations.

Purchase Verification

The IRS requires proof that the vehicle was bought from a licensed dealer and meets eligibility criteria. A sales contract or purchase agreement must include the make, model, model year, VIN (Vehicle Identification Number), and final sale price.

Dealers must provide a report confirming the vehicle’s battery capacity and eligibility. If this is not provided, requesting a written statement verifying compliance can help avoid issues when claiming the credit.

Title and Registration

Ownership documentation is necessary to confirm the vehicle was legally transferred. A copy of the title or registration issued by the state’s Department of Motor Vehicles (DMV) should be kept. The title must be in the taxpayer’s name, as the credit is only available to the individual who purchased and registered the vehicle.

If the vehicle was financed, the lender may hold the title until the loan is paid off. In this case, a copy of the registration and loan agreement can serve as proof of ownership. The registration must also indicate personal use, as vehicles registered for business or commercial purposes may not qualify.

Tax Form References

To claim the credit, taxpayers must complete IRS Form 8936, “Qualified Plug-in Electric Drive Motor Vehicle Credit,” which requires details such as the VIN, purchase date, and battery capacity. The credit amount is then reported on Schedule 3 (Form 1040).

Taxpayers should retain supporting documents for at least three years in case of an audit. If filing electronically, ensuring all required information is entered correctly can help prevent processing delays. Those using tax preparation software should confirm that it supports Form 8936.

Income Thresholds

The used EV tax credit is subject to income limits based on modified adjusted gross income (MAGI), which includes wages, business income, and investment earnings before certain deductions.

For 2024, the credit is available only to taxpayers with a MAGI below:

– $75,000 for single filers
– $112,500 for heads of household
– $150,000 for married couples filing jointly

If income exceeds these limits, the credit is disallowed—there is no partial benefit. Individuals near the threshold should review their tax situation to determine if deductions or adjustments could help them qualify. Contributions to retirement accounts or Health Savings Accounts (HSAs) may lower MAGI and make eligibility possible.

Taxpayers can use either their MAGI from the year of purchase or the prior year, whichever is lower. If income fluctuated, referencing the earlier tax return may still allow a buyer to qualify. For example, if a taxpayer’s MAGI was $148,000 in 2023 but increased to $155,000 in 2024, they could claim the credit using their 2023 income. This flexibility benefits individuals with variable earnings, such as freelancers or those who received one-time bonuses.

Claiming the Credit on Your Return

When filing your tax return, accurately reporting the used EV tax credit ensures the full benefit is applied. The credit reduces tax liability but is non-refundable, meaning any excess amount beyond total taxes owed will not result in a refund. If the total tax due is lower than the credit amount, the unused portion cannot be carried forward to future years.

Taxpayers expecting to qualify may adjust their withholding or estimated tax payments to maximize the benefit. Since the credit cannot generate a refund, reducing paycheck withholdings or adjusting quarterly estimated payments could prevent overpaying taxes that would otherwise be non-recoverable. This is particularly relevant for self-employed individuals or those managing multiple income sources.