§25E Previously-owned clean vehicles

Summary

You can get a tax credit if you buy and start using a qualifying used clean vehicle in the tax year. The credit is the smaller of $4,000 or 30% of the vehicle’s sale price. To qualify, use the lower of your modified adjusted gross income (MAGI) for this year or last year; if that lower amount is over the threshold, you cannot get the credit. The thresholds are $150,000 for joint returns or surviving spouses, $112,500 for heads of household, and $75,000 for others. MAGI here means your adjusted gross income plus amounts excluded under sections 911, 931, and 933. You must put the vehicle identification number (VIN) on your tax return. No credit is allowed for vehicles bought after September 30, 2025. One-line definitions: previously-owned clean vehicle — a used vehicle at least two model years older than the year you buy it, first used by someone else, bought in a qualified sale, and meeting certain clean-vehicle or fuel-economy rules; qualified sale — sold by a dealer for $25,000 or less and is the first transfer since this rule started to a qualified buyer; qualified buyer — an individual who buys the car to use (not to resell), who isn’t claimed as another person’s dependent, and who hasn’t received this credit in the prior 3 years. Rules similar to those in section 30D apply.