§25E — Title 26 Internal Revenue Code | U.S. Code

Summary

This tax credit for buying a used clean vehicle has ended: no credit is allowed for any vehicle acquired after September 30, 2025. Before that cutoff, a qualified buyer could claim a credit equal to the lesser of $4,000 or 30 percent of the sale price. The rules required the car to cost no more than $25,000, be bought from a dealer, be at least 2 model years old, and be its first resale to a qualified buyer. You had to buy it for your own use, not be claimed as someone else's dependent, not have used this credit in the past 3 years, and list the vehicle identification number on your tax return. Income limits also applied: your modified adjusted gross income (this year or last year, whichever was lower) could not be above $150,000 on a joint return, $112,500 for a head of household, or $75,000 for others.

Title 26, §25E

Internal Revenue Code — Source: USLM XML via OLRC

(a)In the case of a qualified buyer who during a taxable year places in service a previously-owned clean vehicle, there shall be allowed as a credit against the tax imposed by this chapter for the taxable year an amount equal to the lesser of—

(1)$4,000, or

(2)the amount equal to 30 percent of the sale price with respect to such vehicle.

(b)(1)No credit shall be allowed under subsection (a) for any taxable year if—

(A)the lesser of—

(i)the modified adjusted gross income of the taxpayer for such taxable year, or

(ii)the modified adjusted gross income of the taxpayer for the preceding taxable year, exceeds

(B)the threshold amount.

(2)For purposes of paragraph (1)(B), the threshold amount shall be—

(A)in the case of a joint return or a surviving spouse (as defined in section 2(a)), $150,000,

(B)in the case of a head of household (as defined in section 2(b)), $112,500, and

(C)in the case of a taxpayer not described in subparagraph (A) or (B), $75,000.

(3)For purposes of this subsection, the term “modified adjusted gross income” means adjusted gross income increased by any amount excluded from gross income under section 911, 931, or 933.

(c)For purposes of this section—

(1)The term “previously-owned clean vehicle” means, with respect to a taxpayer, a motor vehicle—

(A)the model year of which is at least 2 years earlier than the calendar year in which the taxpayer acquires such vehicle,

(B)the original use of which commences with a person other than the taxpayer,

(C)which is acquired by the taxpayer in a qualified sale, and

(D)which—

(i)meets the requirements of subparagraphs (C), (D), (E), (F), and (H) (except for clause (iv) thereof) of section 30D(d)(1), or

(ii)is a motor vehicle which—

(I)satisfies the requirements under subparagraphs (A) and (B) of section 30B(b)(3), and

(II)has a gross vehicle weight rating of less than 14,000 pounds.

(2)The term “qualified sale” means a sale of a motor vehicle—

(A)by a dealer (as defined in section 30D(g)(8)),

(B)for a sale price which does not exceed $25,000, and

(C)which is the first transfer since the date of the enactment of this section to a qualified buyer other than the person with whom the original use of such vehicle commenced.

(3)The term “qualified buyer” means, with respect to a sale of a motor vehicle, a taxpayer—

(A)who is an individual,

(B)who purchases such vehicle for use and not for resale,

(C)with respect to whom no deduction is allowable with respect to another taxpayer under section 151, and

(D)who has not been allowed a credit under this section for any sale during the 3-year period ending on the date of the sale of such vehicle.

(4)The terms “motor vehicle” and “capacity” have the meaning given such terms in paragraphs (2) and (4) of section 30D(d), respectively.

(d)No credit shall be allowed under subsection (a) with respect to any vehicle unless the taxpayer includes the vehicle identification number of such vehicle on the return of tax for the taxable year.

(e)For purposes of this section, rules similar to the rules of section 30D(f) (without regard to paragraph (10) or (11) thereof) shall apply for purposes of this section.

(f)Rules similar to the rules of section 30D(g) shall apply.

(g)No credit shall be allowed under this section with respect to any vehicle acquired after September 30, 2025.

Notes & Related Subsidiaries

Editorial Notes

References in Text

The date of the enactment of this section, referred to in subsec. (c)(2)(C), is the date of enactment of Pub. L. 117–169, which was approved Aug. 16, 2022.

Amendments

2025—Subsec. (g). Pub. L. 119–21 substituted “

September 30, 2025” for “

December 31, 2032”. 2022—Subsecs. (f), (g). Pub. L. 117–169, § 13402(b), added subsec. (f) and redesignated former subsec. (f) as (g).

Statutory Notes and Related Subsidiaries

Effective Date

Pub. L. 117–169, title I, § 13402(e), Aug. 16, 2022, 136 Stat. 1964, provided that: “(1) In general.—Except as provided in paragraph (2), the

Amendments

made by this section [enacting this section and amending this section and section 6213 of this title] shall apply to vehicles acquired after December 31, 2022. “(2) Transfer of credit.—The

Amendments

made by subsection (b) [amending this section] shall apply to vehicles acquired after December 31, 2023.”

§25E Previously-owned Clean Vehicles

Summary

Title 26, §25E

Notes & Related Subsidiaries

Editorial Notes

References in Text

Amendments

Statutory Notes and Related Subsidiaries

Effective Date

Amendments

Amendments

Citations & Metadata