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ing to the IRS, you must file Form 8936, “Qualified Plug-in Electric Drive Motor Vehicle Credit (Including Qualified Two-Wheeled Plug-in Electric Vehicles)” with your tax return. The dealership must file Form 15400, “Clean Vehicle Seller Report,” and the credit is deducted from how much you owe on your taxes.

More In Forms and Instructions Use Form 8936 to figure your credit for qualified plug-in electric drive motor vehicles you placed in service during your tax year.

Since the start of 2023, you can take advantage of a used clean car tax credit. This credit is available when you buy an eligible used EV or fuel cell vehicle from a licensed dealer for less than $25,000. The credit applies to 30% of the sale price up to a maximum amount of $4,000.

As of 2023, people who buy new electric vehicles may be eligible for a tax credit as high as $7,500, and used electric car buyers may qualify for up to $4,000 in tax breaks. The nonrefundable credit can be claimed on tax returns filed in 2024.

The credit reduces a filer's federal income tax by up to $7500. For instance, if you bought an EV eligible for a $7500 tax credit and your total federal taxes for the year came to $8500, then you would owe just $1000 to the government. EV tax credits are nonrefundable.

This robust tax break, which offers a credit of up to $7,500 with the purchase of a new electric vehicle, was overhauled by 2022's Inflation Reduction Act, and in 2023, the IRS and Treasury Department have been clarifying how and when you can use the credit.

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Used Clean Vehicle Purchases The credit is nonrefundable, meaning it won't generate a tax refund if you don't owe any taxes. For years prior to 2023, the new clean vehicle tax credit amount is similar but the rules are different.