Usually when discussing federal electric vehicle tax credits in the United States, most people are referring to the Clean Vehicle Credit (formerly the Qualified Plug-in Electric Drive Motor Vehicle Credit) for new EVs. But that’s not the only federal tax credit for buying an EV. In addition to the Clean Vehicle Credit there are now two additional incentives: the Used Clean Vehicle Credit and the Commercial Clean Vehicle Credit. Here’s what you need to know about how these newer credits work.
What is the federal US Used Clean Vehicle tax credit?
With the Used Clean Vehicle Credit, you can receive credit for 30% of the purchase price up to a maximum of $4,000. The credit can be used on any qualified used battery electric vehicle (BEV), used plug-in hybrid vehicle (PHEV), or used fuel cell electric vehicle (FCEV) that has been purchased from a licensed auto dealer for $25,000 or less. It’s important to note that this credit is nonrefundable, meaning you can’t receive more than you owe in taxes. For example, if you owe $2,500 in taxes, and you qualify for the full $4,000 from the used CVC, your tax credit will simply zero out your tax bill. You also cannot roll the remainder over onto any taxes owed in the future.
How to qualify for the Used Clean Vehicle Credit
Like the Clean Vehicle Credit for new vehicles, there are individual (taxpayer) and vehicle qualifications.
Individual qualifications
To qualify for the federal used Clean Vehicle Tax Credit, an individual must:
Have bought the used EV for yourself, not for resale
Not be the original owner of the EV
Not be claimed as a dependent on another person’s tax return
Not have claimed another used CVC in the three years prior to the purchase date
In addition to these qualifiers, an individual’s modified adjusted gross income (AGI) may not exceed:
$150,000 for married people filing jointly, or a surviving spouse
$112,500 for heads of households
$75,000 for all other tax filers
You can use your modified AGI from the year that you take delivery of the vehicle or the previous year—whichever is lower. If your income is below the threshold for one of the two years, you can claim the credit, according to the Internal Revenue Service (IRS).
Vehicle qualifications
To qualify, the used EV must meet all of the following requirements:
Have a sale price of $25,000 or less
Have a model year that is at least two years older than the year you purchase it. For example, a used electric vehicle purchased in 2025 would need a model year of 2023 or earlier.
Not have already been transferred after August 16, 2022, to a qualified buyer.
Have a gross vehicle weight rating (GVWR) of less than 14,000 pounds.
Be an eligible FCV or plug-in EV with a battery capacity of at least 7 kilowatt-hours
Be for driving primarily in the United States
Be sold by a licensed dealer
You can visit the IRS’s website to find a list of qualified vehicles for the used EV tax credit.
How do I claim the federal used EV tax credit?
To claim the federal used electric car tax credit, you will need to fill out IRS Form 8936. File the form with the tax return for the year you took possession of the vehicle. You will also need the EV’s vehicle identification number (VIN).
What is the federal US Commercial Clean Vehicle tax credit?
This EV credit for business, which can be claimed by businesses and tax-exempt organizations, is worth up to:
$7,500 for qualified vehicles with gross vehicle weight ratings of under 14,000 pounds.
$40,000 for all other vehicles.
It equals the lesser of:
30% of your basis in the vehicle (the cost after taxes and registration)
The incremental cost of the vehicle (excess of purchase price versus a comparable ICE vehicle)
As the US Department of Energy writes when discussing the incremental costs for electric vehicles: “Based on current costs, representative clean vehicles under 14,000 pounds have generalized incremental costs relative to conventional vehicles that range from $7,000 to $35,500. With the exception of PHEV Compact cars, all vehicles under 14,000 pounds have an incremental cost of $7,500 or greater. For vehicle classes over 14,000 pounds, the incremental cost relative to a conventional vehicle ranges from $28,000 to $297,500. Battery size and fuel cell costs are the key drivers of incremental cost, resulting in an incremental cost for Class 4-6 vehicles of $34,500 (BEV), $28,000 (PHEV), and $41,000 (FCEV). All other vehicle classes larger than 14,000 pounds have incremental costs of $66,000 or greater.”
How to qualify for the Commercial Clean Vehicle Credit
Business qualifications
Businesses and tax-exempt organizations can qualify for the Clean Commercial Vehicle Credit, and there is no limit to the number of credits a business can claim. As with the Used Clean Vehicle Credit, the Commercial Clean Vehicle Credit is non-refundable, meaning you cannot get back more money than you owe in taxes. This credit can, however, be carried over as a general business credit.
Vehicle qualifications
To start, a qualifying vehicle must be subject to a depreciation allowance. There is an exception to this for vehicles of tax-exempt organizations that are not subject to a lease agreement. Qualifying commercial vehicles must:
Be made by a qualified manufacturer
Be for business use and not for resale
Be used primarily in the USA
Not have been used to claim any other Clean Vehicle Credit
Be either 1. motor vehicle manufactured primarily for use on public roads (must comply with federal safety standards); or 2. mobile machinery (defined in section 8 of IRC 4053)
The vehicle or machinery must also either be:
A plug-in EV that draws a significant amount of its propulsion from an electric motor with a battery capacity of at least:
7 kilowatt hours if the gross vehicle weight rating is < 14,000 pounds.
15 kilowatt hours if the gross vehicle weight rating is 14,000 pounds or more.
A fuel cell motor vehicle that satisfies the requirements laid out in IRC 30B(b)(3)(A) and (B).
How do I claim the federal commercial EV tax credit?
The IRS offers a Commercial Clean Vehicle Credit for qualifying EVs purchased for business use in or after 2023. Claiming procedures and documentation requirements may vary, so it’s important to check the latest guidance from the IRS or consult a tax professional. Click here to learn more about the Commercial CVC.
Common Mistakes to Avoid When Claiming Used and Commercial Clean Vehicle Tax Credits
The Inflation Reduction Act of 2022 expanded and updated several tax credits to encourage the adoption of clean energy vehicles. While these can offer substantial savings, misunderstanding the requirements for the used EV tax credit and the commercial vehicle tax credit can result in IRS issues, delayed refunds, or even ineligibility. Here are some common pitfalls to avoid:
1. Failing to Check Eligibility for the Used EV Tax Credit
Before claiming the used EV tax credit, ensure you meet all IRS requirements. For example, your vehicle must be purchased from a licensed dealer for $25,000 or less, and you must not be the vehicle’s original owner. Claiming the used electric car tax credit without meeting these criteria can delay your refund. Even worse, it could result in denial or penalties.
2. Claiming for Vehicles Previously Allowed a Credit
Another common mistake individuals make when claiming the federal EV tax credit is trying to claim it for a vehicle that has already been used to receive the benefit. The IRS only allows the credit amount once per vehicle. Therefore, if a prior owner claimed the credit, the car becomes ineligible for future buyers.
3. Overlooking Your Business Structure or Tax Status
Not all businesses or organizations are eligible for the commercial clean vehicle tax credit or the federal EV tax credit. Entities such as S corporations, nonprofits, and trusts may face additional limitations or reporting obligations. Failing to account for your entity type, or assuming eligibility without confirming IRS criteria, can result in disallowed claims or compliance issues.
4. Misreporting the Comparable Vehicle Price
When claiming the commercial EV tax credit, one eligibility factor is the incremental cost—the difference between your vehicle’s cost and that of a comparable internal combustion engine (ICE) vehicle. If you miscalculate or fail to document this comparison properly, your credit amount could be incorrect, triggering IRS scrutiny. Make sure to base your calculation on IRS or Department of Energy guidance and keep clear records.
5. Omitting Required IRS Documentation
To claim either the used EV tax credit or the commercial clean vehicle credit, you must provide the required documentation to the IRS. For commercial claims, this includes certification that the vehicle draws electricity from an external source or meets other technical specifications. This documentation is usually available through the manufacturer or dealer. For used EV purchases, you’ll need to supply the vehicle identification number (VIN) and confirm that the vehicle was bought from a licensed dealer. Missing or incomplete documentation could delay your refund or result in the credit being denied.
Power Up with Blink
Now is a great time to buy an electric vehicle! With evolving incentives and growing support for clean transportation, we recommend you speak with a qualified tax preparer to ensure you receive the full benefits of any current or new clean vehicle tax credits. Thinking about charging stations? Be sure to check tax credits or rebates for both commercial EV charging equipment and residential EV charging equipment. The future is electric. Contact us for your quote today!
*Note: These tax credits are only available for vehicles purchased on or after Jan. 1, 2023. You can claim the credit when you file taxes for the year in which the vehicle was purchased, provided it meets IRS eligibility requirements.