This credit has been in place since the passage of the 2022 Inflation Reduction Act (IRA), but it was removed as part of a new budget reconciliation bill, aka the One Big Beautiful Bill Act.
For now, buyers can still claim the tax credit on eligible used vehicles. However, the upcoming expiration date doesn’t mean you should rush into a purchase to beat the deadline. “Even when the tax incentive goes away, used electric vehicles will likely still cost much less than similar gas-powered vehicles,” says Alex Knizek, associate director of auto test development at CR’s Auto Test Center. “Because EV technology is developing so quickly, depreciation on used EVs is still high.”
Knizek says it’s only worth it to take advantage of the tax credit if you’ve already done your research and found a safe, reliable used EV or PHEV that fits your needs and budget. “Otherwise, take your time and find the right car,” he says.
In addition, it’s important to know that the majority of used EVs don’t qualify for the used tax credit anyway. Requirements that the used car’s price not exceed $25,000 and a stipulation that almost disqualifies most vehicles with more than one owner mean that only about 18 percent of used EVs and PHEVs currently on sale likely qualify for the credit, according to CR’s analysis of online used car databases.
Below is an explanation of how the incentives work for now.
