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Money with Michael

Preowned Vehicle Tax Credit

Article by Michael Solomon

Photography by Waterbear Photography - Kimber Greenwood

Originally published in Gainesville City Lifestyle

Thinking of buying a used car but need a little incentive. The IRS is providing just that if you are interested in an Electric Vehicle (EV). If you buy a used electric car from a dealer for $25,000 or less, you may be eligible for a used clean vehicle tax credit. The credit the IRS is offering is 30% of the sale price with a maximum credit of $4,000.

In order for you to qualify you have to pass all of the following conditions:

- 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 or $75,000 for all other filers

For the vehicle to qualify it must pass all of the following conditions:

- Have a sale price of $25,000 or less

- Have a model year at least 2 years earlier than the calendar year when you buy it.

- 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 IRS recommends that when you purchase a used electric car from a dealer that you get the
following information:

(1) Dealer's name and taxpayer ID number

(2) Buyer's name and taxpayer ID number

(3) Sale date and sale price

(4) Maximum credit allowable under IRC 25E

(5) Vehicle identification number (VIN),

(6) Battery capacity

Please note that purchases made before 2023 don't qualify.

Michael Solomon, Lead Accountant, CEO, Accounting Personalized