Claiming Vehicle Tax Credits in 2025

Purchasing an electric or fuel cell vehicle in 2025 could come with significant tax savings. The Clean Vehicle Credit and Previously-Owned Clean Vehicle Credit offer incentives for buying new and used qualifying vehicles.

Clean Vehicle Credit (New Vehicles)

If you purchase a new plug-in electric vehicle (PEV) or fuel cell electric vehicle (FCV), you may qualify for a tax credit of up to $7,500.

However, your modified adjusted gross income (AGI) must not exceed:

• $300,000 for married couples filing jointly.
• $225,000 for heads of household.
• $150,000 for single filers.

To qualify, the vehicle must:

• Have a battery capacity of at least 7 kWh.
• Weigh less than 14,000 pounds.
• Be made by a qualified manufacturer and assembled in North America.
• Meet specific critical mineral and battery component requirements.
• Have a manufacturer-suggested retail price (MSRP) below $80,000 for SUVs, vans, and trucks or $55,000 for other vehicles.

Credit Amounts & Dealer Assignments

• If the vehicle meets one of the battery-related requirements, the credit is $3,750.
• If it meets both, the credit is $7,500.
• This credit is nonrefundable, meaning it can only reduce your tax liability.
• Instead of claiming the credit on your tax return, you may assign it to the dealer, using it as a down payment. However, if your AGI is too high, you must repay the credit when filing taxes.

To check which vehicles qualify, visit the IRS vehicle lookup tool.

Previously-Owned Clean Vehicle Credit (Used Vehicles)

If you purchase a used qualifying electric or fuel cell vehicle, you may be eligible for a credit of up to $4,000 or 30% of the purchase price (whichever is less).

To qualify, your AGI must not exceed:

• $150,000 for married filing jointly.
• $112,500 for heads of household.
• $75,000 for single filers.

The vehicle must:

• Have a sale price of $25,000 or less.
• Be at least two model years old at the time of purchase (e.g., a vehicle bought in 2025 must be from 2023 or earlier).
• Be purchased from a licensed dealer.
• Have a battery capacity of at least 7 kWh.
• Be primarily used in the United States.

Like the new vehicle credit, this one is nonrefundable and can only be used to reduce your tax liability.

Making the Most of Your Credit

Before purchasing a new or used electric vehicle, check eligibility requirements to ensure you can claim the credit. These incentives make it more affordable to transition to clean energy transportation, but proper planning is essential to maximize your tax benefits.

For more details, visit the IRS used vehicle lookup tool.  As always, feel free to contact your DWD CPA with further questions.