Now is not the time to sit on the sidelines if you’ve been thinking about joining the EV team. Federal Tax Credits, up to a whopping $7,500 for new plug-in Electric and Fuel Cell Electric Vehicles end on September 30, 2025.
Even some pre-owned vehicles purchased now through September 30, 2025, are eligible for a tax credit of up to $4,000.*
Here’s what you need to know so you can make an informed decision.
The EV Tax Credit is available to individuals or their businesses but to qualify, you must buy the vehicle for your own use, not for resale and use it primarily in the United States. Another requirment is your adjusted gross income (AGI) must not exceed $300,000 if you’re a married couple filing jointly, $225,000 for head of household, or $150,000 for all other tax filers.
The following information is taken in part from the U.S. Department of Energy website and states that you can use your modified AGI from the year you take delivery of the vehicle or the year before, whichever is less. If your modified AGI is below the threshold in one of the two years, you can claim the credit. Your modified AGI is the amount from line 11 of your Form 1040 plus:
- Any amount on line 45 or line 50 of Form 2555, Foreign Earned Income.
- Any amount excluded from gross income because it was received from sources in Puerto Rico or American Samoa.
The credit is nonrefundable when you file your taxes, so you can’t get back more on the credit than you owe in taxes if you do not transfer the credit at purchase time. You can’t apply any excess credit to future tax years.
Before it’s time to choose the EV or plug-in hybrid vehicle from Leith that best fits your life, you will need to understand which vehicles qualify for the tax credit and why.
To Qualify, a Vehicle Must:
- Have a battery capacity of at least 7 kilowatt hours
- Have a gross vehicle weight rating of less than 14,000 pounds
- Be made by a qualified manufacturer. (Fuel cell vehciles don’t need
to be made by a qualified manufacturer to be eligible).
The sale qualifies only if you buy the vehicle new from one of our Leith dealerships and the dealership reports the required information to you at the time of sale and to the IRS. The dealership (seller) is required to report your name and taxpayer identification number to the IRS for you to be eligible to claim the credit.
For vehicles placed in service after January 1, 2024, the dealer must be registered with IRS Energy Credits Online, and the vehicle must be approved through Energy Credits Online at the time of sale.
But Wait, There’s More!
The new vehicle you’d like to purchase using the EV Tax Credit must undergo final assembly in North America. This is an important requirement and why not all EVs currently for sale will qualify for this program.
You can find your vehicle’s weight, battery capacity, final assembly location (listed as “final assembly point”) and VIN on the vehicle’s window sticker or just go to the Department of Energy’s page on Electric Vehicles with Final Assembly in North America and use the VIN Decoder tool under “Specific Assembly Location Based on VIN.”
For vehicles placed in service (delivered to the buyer) after April 18, 2023, the credit amount will depend on the vehicle meeting the critical minerals sourcing and/or battery components sourcing requirements. A vehicle meeting both sourcing requirements may be eligible for the full $7,500 credit, and a vehicle meeting only one of these sourcing requirements may be eligible for a credit of $3,750. A vehicle meeting neither requirement will not be eligible for a credit.
It’s a good idea to check with your Leith dealer regarding the eligibility of and credit amount for a specific vehicle.
Finally, there’s a reqirement that the vehicle’s manufacturer suggested retail price (MSRP) can’t exceed $80,000 for vans, SUVs and pickup trucks. For all other vehicles, the MSRP must not be over $55,000.
The MSRP is the base retail price suggested by the manufacturer, plus the retail price suggested by the manufacturer for each accessory or item of optional equipment physically attached to the vehicle at the time of delivery to the dealer. It does not include destination charges, the cost of optional items added by the dealer, or taxes and fees. In addition, manufacturer/dealer incentives and trade-ins do not affect MSRP.
Now that the legalese is out of the way, let’s move on to the fun part to see what makes and models of new and used EVs offered by our Leith dealerships qualify for the EV Tax Credit.
Federal Tax Credits for New Plug-in Electric and Fuel Cell Electric Vehicles.
Do Used EVs Qualify for the EV Tax Credit?
Yes! Pre-owned all-electric, plug-in hybrid, and fuel cell electric vehicles bought now through September 30, 2025 may be eligible for a federal income tax credit. The credit equals 30% percent of the sale price up to a maximum credit of $4,000.
The credit is nonrefundable when you file your taxes, so you can’t get back more on the credit than you owe in taxes if you do not transfer the tax credit at the point of sale. You can’t apply any excess credit to future tax years.*
Federal Tax Credits for Pre-owned Plug-in Electric and Fuel Cell Vehicles.
Disclaimer*
The information regarding vehicle eligibility for the Qualified Used Clean Vehicle Credit represents information from the IRS. The information on this page should not be viewed as an official or legally binding document. Other requirements or exceptions may apply. For more detailed information, please consult an IRS tax representative and/or official IRS publications.
Learn more about electric vehicles and begin your EV shopping experience here. https://www.leithcars.com/why-buy-electric-cars.htm
By Mark Arsen, LeithCars.com
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