The Inflation Reduction Act extends the Federal EV Tax Credit to used EVs, but the rules are complicated. Here is everything you need to know, plus a list of used EVs that could qualify.
The passing of the Inflation Reduction Act means that anyone looking for a used EV is in luck.
For the first time, used EVs are eligible for the federal EV tax credit. You could net up to $4,000 or 30% of the purchase price of a used EV in the form of a tax credit, but there are some caveats.
Both the buyer and EV model must meet the government’s criteria in order to qualify for the tax credit. Let’s evaluate both requirements below.
Used EV requirements:
- Costs less than $25,000
- Is more than two years old
- Is sold by an authorized dealer.
- Can only claim once every 3 years
- Singles – $75,000 or less income
- Heads of household max $112,500 income
- Max $150,000 income for joint filers
While these rules may seem a bit complex, the good news is that used EVs don’t have to meet any of the critical minerals or battery components requirements, nor the need for final assembly in North America like new EVs do to be eligible for the $7,500 EV tax credit.
The bad news is that many used EVs priced at $25,000 or less have limited range. For anything comparable to today’s EV range, you’ll want to look for a deal on a 2019 model if you can.
Note that the new rules for used EVs stipulate that:
“…the term ‘dealer’ means a person licensed by a State, the District of Columbia, the Commonwealth of Puerto Rico, any other territory or possession of the United States, an Indian tribal government, or any Alaska Native Corporation (as defined in section 3 of the Alaska Native Claims Settlement Act (43 U.S.C. 1602(m)) to engage in the sale of vehicles.”
We asked Andrew Crowell, CEO of Key Savvy to weigh in on who qualifies as an authorized dealer under these new rules. Crowell said, “Basically, any licensed dealer in any US state or territory qualifies. Dealers have to report the sale to the IRS, which is why a private party sale doesn’t normally qualify.”
While dealerships handle most used car sales, millions of cars are sold each year between private parties. More than 1.4 million used vehicles were sold between private parties in the U.S. in July 2022 alone, according to Statista.
Key Savvy offers an innovative solution for buyers and sellers of used EVs who want to skip the dealership but claim the tax credit.
Crowell says, “Since KeySavvy processes private party sales as a licensed dealer, we can report sales to the IRS and enable buyers that meet the other eligibility criteria to take advantage of the tax credit.”
Used EV Models that Could Qualify for the Tax Credit
Here are 15 used EVs that could qualify for the federal tax credit.
#1. Chevy Bolt 2018 and Earlier
Price range used: from $21,977 to $25,000+
A new Chevrolet Bolt won’t get you a tax credit in 2022, so pick up a used Bolt and save even more with the $4,000 tax credit!The 2018 models forward offer at least 238 miles of range, which is far more than most EVs of the same age.
#2. Chevy Spark 2016 and Earlier
Price range used: from $9,495 to $18,684
Chevy discontinued the Spark EV after 2016, and the newer Bolt EV won’t net you a tax credit if you buy new. Give a Chevy Spark a new life and enjoy a decent range of 82 miles while claiming a nice used EV tax credit and a vehicle costing well under $10k if you look around.
#3. Nissan Leaf (2019 models and earlier)
Price range used: from $6,925 to $25,000
A new Leaf could cost $25,000 to more than $40,000, depending on the build.
Pick up a used Leaf for $25,000 (ideally $17,500) or less and save an extra $4,000 through the used EV tax credit. The Nissan Leaf is a tried and tested front-wheel-drive, five-door hatchback that’s been a favorite with EV enthusiasts since it launched in 2011. Even a 2016 Nissan Leaf has a range of more than 100 miles on a single charge. Find a 2019 model under $25k and you can net the used tax credit and enjoy a range of more than 200 miles (for a 2019 Nissan Leaf with a 62 kW-hr battery pack).
Leaf models our research determined qualify for the tax credit:
- Nissan Leaf S – 2019 and earlier
- Nissan Leaf SV – 2018 and earlier
- Nissan Leaf SV PLUS – 2019 and earlier
- Nissan Leaf SL – 2018 and earlier
- Nissan Leaf S-24 – 2016 and earlier
#4. Toyota Mirai Base 2019 and earlier
Price range used: from $11,239 to $24,700
The Toyota Mirai is a 4-door sedan EV that likely won’t qualify for the new car EV tax credit. You’ll pay full price ($49,500 or more) new but could pick up a 2019 Toyota Mirai for $24,700 or less and save an additional $4,000 with the used EV tax credit.
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#5. Toyota RAV4 EV Base – 2013 and earlier
Price range used: from $14,098 to $21,500
A new Toyota RAV4 Prime EV will cost at least $40,300 and likely won’t net you the EV tax credit. Go used and you can save a bundle, though you’ll miss out on some features as 2014 models and later are selling at prices higher than the used EV tax credit cut-off of $25,000.
#6. Volkswagen e-Golf SE
Price range used: from $10,950 to $25,000+
There’s not been a new version of the VW e-Golf since 2019, so if you’re keen on this 5-seat all-electric hatchback, you can pick one up used and claim the tax credit.
Bear in mind that the e-Golf has a much shorter range than similar EVs like the Nissan Leaf and Chevy Bolt though, at just 125 miles for the 2019 model.
Additional e-Golf models our research determined qualify for the tax credit:
- Volkswagen e-Golf SEL Premium
- Volkswagen e-Golf LE
#7. BMW i3 Base & i3 60 Ah
BMW i3 Base price range used: from $12,900 to $22,877
i3 60 Ah price range used: from $22,749
It doesn’t look like any BMW EVs will qualify for the new EV tax credit in 2022, so if you’re keen on an electric bimmer, going used is your best bet. The BMW i3 is no longer available new, but BMW has certified used i3 inventory available for under $25,000 across the U.S.
#8. Mercedes-Benz B-Class Electric Drive
Price range used: from $11,900 to $24,988
Mercedes-Benz no longer makes the B-Class 250e, AKA the Electric Drive. That’s likely because its range for 2015-2017 versions was less than 100 miles on a full charge. If you’re just looking for a Mercedes to nip about town, though, a used 250e could be just the ticket.
#9. Hyundai Nexo
Price range used: from $16,999 to $24,995
Hyundai doesn’t make any models that qualify for the new EV tax credits in 2022, so if you like this brand, you could pick up a Hyundai Nexo EV for easily less than $25,000 and claim the used EV tax credit too. Find a 2019 model and you’re looking at a range of 380 miles on a single refuelling of the hydrogen tank – yup this one is a hydrogen fuel-cell electric vehicel!
#10. FIAT 500e Base
Price range used: from $7,997 to $24,477
A great city car, offering a range of about 84 miles, the Fiat 500e is zippy, tiny, and a favorite with folks who hate parallel parking. The 2022 Fiat 500e has a range of about 199 with the bigger battery option, though, so if you have range anxiety, a used 2019 or earlier Fiat 500e might not be for you.
#11. Tesla Model S Base
Price range used: from $24,000
That’s right, if you look hard, you may be able to find a Tesla Model S for under $25,000. Who said you can’t claim a tax credit on a Tesla in 2022?! The downside is that you’re likely looking at a Model S that’s covered at least 100,000 miles, so used is… well, used.
#12. Kia Soul EV Base
Price range used: from $12,995 to $18,995
Pick up a 2018 or 2019 Kia Soul and enjoy a range of around 111 miles, along with a tax credit up to $4,000. Kia has said publicly that none of its vehicles will qualify for the new EV tax credits, so used is the way to go for 2022 and the near future. Kia Soul’s made before 2018 have 20% less range, though, so bear this in mind if you’ll be going a while between charges.
Additional Kia Soul models that could qualify for the used EV tax credit:
- Kia Soul EV +
- Kia Soul EV EV-E
#13. Ford Focus Electric
Price range used: from $9,995 to $23,500
Ford Focus Electric vehicles got a range boost in 2017, so if you’re going used and need a bit more battery life, choose your year wisely. As things stand, it doesn’t look like a new Ford Focus qualifies for the new EV tax credit, at least in 2022. So if you’re after a Ford, complete with all its ease of charging and servicing across the U.S., used is a good way to go this year.
#14. Ford Transit Connect Electric Cargo Van XLT
Price range used: from $5,500 to $19,950
Ford was the first to launch an all-electric cargo van (in 2010) but just announced it won’t make any more Transit Connect vans after 2023. If you want to claim the EV tax credit for a Ford Transit Connect, then, you’re going to have to go used. This is a van that could be used for a conversion, and as we have documented in a recent post, could even house solar panels on the roof.
#15. Smart fortwo electric drive prime, pure, and passion
Price range used: from $7,795 to $23,991
While nippy and easy to park, Smart fortwo EVs offer little range (less than 58 miles for 2019 models and earlier). If you’re just looking for a used EV to cover small distances, and have easy access to a charger, a used Smart fortwo could cost you as little as $5,600, once you apply the used EV tax credit!
Things to keep in mind
Although the models listed above do seem to qualify for the used EV tax credit, it is important to keep the following things in mind as you look around:
The price you pay for the used EV determines eligibility, as does the number of times the EV has been sold, and its age. To qualify, a used vehicle must:
- Cost less than $25,000
- Be more than two years old (i.e., have a model year at least two years prior to when you buy it used)
- Not have been sold used to a qualified buyer since the new tax credit rules came into effect. August 16, 2022
- 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.
To claim the used EV tax credit, the buyer must be an individual (i.e., not a company or business) and be buying the vehicle for personal use, not for resale. The buyer must also:
- 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.
There are also income limits for buyers of used EVs who hope to claim the tax credit:
- For anyone filing singly, your income must be $75,000 or less in the year of purchase or the preceding year
- For heads of household, the income limit is $112,500
- For joint filers or a surviving spouse, the income limit is $150,000.
According to a report by Recurrent, the used EV market in the U.S. has tripled in size in 18 months (from April 2021 to January 2023). Dealerships have nearly 38,000 used EVs in their inventory as of January 2023, and prices have fallen around 17% from their July 2022 peak. Watch out in particular for bargain prices for the Chevy Bolt and Tesla Model 3, both of which now qualify for the new EV tax credit, causing a ripple effect in the used EV market.
Found a private sale EV you’d like to buy? Consider using Key Savvy to claim that used EV tax credit.
Good luck and happy hunting!