---
title: Understanding the Federal “Previously Owned Clean Vehicle” Tax Credit
description: A federal previously-owned clean vehicle tax credit potentially applies to used battery electric, plug-in hybrid electric, or fuel cell electric vehicles
---

[NHADA | Blog ](https://www.nhada.com/blog)

# [Understanding the Federal “Previously Owned Clean Vehicle” Tax Credit](https://www.nhada.com/blog/understanding-the-federal-previously-owned-clean-vehicle-tax-credit)

 Written by [National Auto Dealers Association (NADA)](https://www.nhada.com/blog/author/nada) | Mar 9, 2023

**Buying EVs for Used Inventory? **

Effective Jan. 1, 2023, a federal [previously-owned clean vehicle tax credit](https://marketing.nada.org/acton/ct/4712/s-24ac-2303/Bct/l-094b/l-094b:3b/ct0_0/1/lu?sid=TV2%3A5TPnqbvOu) (Used EV Credit) *potentially *applies to used battery electric (BEV), plug-in hybrid electric (PHEV), or fuel cell electric (FCEV) vehicles sold by licensed dealers between 2023 and 2032. The maximum Used EV Credit is the lesser of $4,000 or 30% of the sales price. But, as detailed below, many used EV sales will be ineligible for a Used EV Credit. To the extent possible, before buying a used EV, determine whether a Used Vehicle Credit may apply when the EV is later sold by the dealership.  

**I. For starters, to be eligible for a Used EV Credit, used EVs must: **

- Have been manufactured by a qualified OEM (virtually all were);
- Be under 14,000 lbs GVWR (if not sure, check the certification label on the driver-side door frame or B-pillar);
- Be propelled by a battery of at least 7 kWh (a concern only for PHEVs) or be a FCEV; *and *   
- Be two model years old or older than the year of sale (i.e, for sales in 2023, MY 2021 or older).

**Bottom Line**: The above requirements should be easy to determine prior to buying a used EV.   

**II. Also, to be eligible for a Used EV Credit, a used EV may *****not *****have been sold after 8/16/22 to a Qualified Buyer who was not the original owner. A Qualified Buyer is someone who: **

- Is an individual (not a business, etc.) who cannot be deducted on someone else’s tax return;
- Purchased the vehicle for use in the U.S. and not for resale; *and *
- Has not claimed a Used EV Credit for a purchase made within the last 3 years.

**Bottom Line: **If a used EV is sold after 8/16/22 to a Qualified Buyer who was not the first owner, the Used EV Credit is no longer available for that EV. However, it may be difficult to determine with certainty whether a prior used EV owner was a Qualified Buyer. Yes, a vehicle history report should show if a used EV was sold after 8/16/22 to an individual who took the title in the United States in his or her name. But, determining whether that buyer was deductible on someone else’s taxes, or previously claimed a Used EV Credit, will be difficult at best. Only if a used EV was not sold after 8/16/22 or was sold since then but only to non-individuals (e.g., businesses), will it be reasonable to assume that it was not previously sold to a Qualified Buyer and may qualify for a Used EV Credit. * *  

**III.  When a used EV is sold at retail, four additional requirements must be met for a Used EV Credit to apply. Specifically:   **

- The purchaser must be a Qualified Buyer (see above) that did not buy the EV new;  
- The purchaser must have a Modified Adjusted Gross Income below the applicable cap; [[1]](https://www.nhada.com/blog/understanding-the-federal-previously-owned-clean-vehicle-tax-credit?hs_amp=true#annotation)
- The sale must be by a licensed dealer for a price that does not exceed $25,000; *and*
- The selling dealer must provide the eligible purchaser with a copy of the required [report form (under Section 25E).](https://marketing.nada.org/acton/ct/4712/s-24ac-2303/Bct/l-094b/l-094b:3b/ct1_0/1/lu?sid=TV2%3A5TPnqbvOu)

[1] $150,000 for married filing jointly or a surviving spouse, $112,500 for heads of households, $75,000 for all other tax filers

**Bottom Line:** Even if one or more of the above four requirements cannot be met, customers often will be willing to purchase a used EV without a federal Used EV Credit.    

Questions may be directed to [regulatoryaffairs@nada.org](mailto:regulatoryaffairs@nada.org).

[View full post](https://www.nhada.com/blog/understanding-the-federal-previously-owned-clean-vehicle-tax-credit)

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