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The federal EV tax credit law is finally getting an update. One of the most notable changes is that many used EVs will now qualify you for a $4,000 tax credit the first time they’re sold. Gigawatt-powered jalopies, here we come!

Can you get the tax credit on a used EV?

Yes, the latest federal EV tax credit extends to used EV purchases. This is a great way for the tax rebate to help folks who can’t afford a brand new Tesla, and the incentive may keep older EVs on the road for longer. Now that’s what we call sustainability.

A dealer technician plugs a Leaf in to charge outside a Nissan dealership.
Nissan Leaf SV | Pat Greenhouse/The Boston Globe via Getty Images

There are a few caveats to how this new credit works. It will apply to any EV (not just EVs assembled in the U.S, like the new EV tax credit). But the purchase price must be $25k or less. That eliminates many EVs.

Just as important, EVs only qualify for the tax credit on their first resale. They also must be more than two years old when you go to purchase them. Finally, you must be purchasing them at a dealership, not in a private sale.

Who is eligible for the used EV tax credit?

Not everyone can claim the $4,000 tax credit on a used EV because there is an income cap. You must make no more than $75k–unless you file as the head of a household un which case you can make $112k. Couples are limited to $150k in the past fiscal year.

A row of Hyundai EVs parked inside a dealership, a table of customers speak with a salesperson in the background.
Hyundai dealership | Anindito Mukherjee/Bloomberg via Getty Images

You also can’t be flipping cars and claiming this tax credit for each one. You can’t even be buying yourself a fresh used EV every year. You can only claim an EV tax credit once every three years.

During 2023, the amount of the EV tax credit you can enjoy will be based on the amount of income tax you pay. This is because you won’t see the money when you purchase an eligible EV, you will have to reply for it as a credit on your taxes that year. If you qualify for a $7,500 rebate but only pay $3,000 in taxes you can only write off $3,000 of your rebate.

But starting in 2024, you will be able to apply the entire rebate at the point of sale–regardless of your tax status. This actually means that the dealership can “buy” the rebate from you and credit it towards its business taxes. This means you’ll probably just enjoy a much lower buying price.

Is there a tax credit on a used Tesla?

Because the used EV tax credit is limited to vehicles resold for less than $25k, many Teslas won’t be eligible. But if you can find one, you’re good to go.

A Tesla model 3 parked in a showroom, a potential buyer visible in the foreground.
Tesla Model 3 | Soeren Stache/picture alliance via Getty Images

Because the federal government doesn’t care where your used EV was assembled (unlike the limited vehicles that qualify for the new EV tax credit), you have many options to choose from. Here’s a short list of EVs to consider if you want this tax credit, courtesy of LeafScore.com:

  • Chevy Bolt
  • Chevy Spark 
  • Nissan Leaf
  • Toyota Mirai Base
  • Toyota RAV4 EV
  • Volkswagen e-Golf SE
  • BMW i3 Base
  • Mercedes-Benz B-Class Electric Drive
  • Hyundai Nexo 
  • FIAT 500e
  • Tesla Model S Base
  • Kia Soul EV Base
  • Ford Focus Electric
  • Ford Transit Connect Electric Cargo Van XLT
  • Smart fortwo electric drive prime

Next, read how much replacing your EV battery costs or dive into the latest EV tax credit in the video below:

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Staff Writer

Henry Cesari

Henry Cesari joined MotorBiscuit in 2021 and brings his deep interest in vintage cars, trucks, and motorcycles to the site. Having restored his first classic car at just 16 years old, Henry has wrenched on everything from overland campers to Japanese motorcycles and even pre-war Bugattis. Henry is also an avid attendee at local car shows and genuinely enjoys connecting with fellow auto enthusiasts.

Henry earned a Bachelor’s in Anthropology and English from the University of Vermont. He has since incorporated his love of the written word with his admiration of classic cars. While Henry is interested in vintage cars, he believes the golden age of cars is yet to come. He is confident journalists will play an important role in this revolution by exposing the industry as it is now and envisioning its possible future.