Used EV Tax Credit 2025: How to Claim Up to $4,000

Did you buy a used electric vehicle (EV) in 2025? If so, you might be sitting on a $4,000 tax refund—but only if you act correctly during this tax season.

While the Used Clean Vehicle Credit (IRS Section 25E) program officially ended early on September 30, 2025, thousands of buyers who purchased their vehicles before that date are still eligible to claim the credit on their 2025 tax returns. Whether you received the discount at the dealership or are waiting to claim it now, filing the correct paperwork is the only way to ensure you keep that money.

This credit was one of the most generous perks in the tax code, offering 30% of the sale price (up to $4,000) back in your pocket. For many, it made the difference between buying a gas guzzler and switching to a Tesla Model 3, Chevy Bolt, or Nissan Leaf.

If you took advantage of the “point-of-sale” transfer and got the discount instantly at the dealer, you might think you’re done. You are not. You must still file the appropriate forms to “settle up” with the IRS. If you don’t, the IRS could demand that $4,000 back.

Here is everything you need to know to successfully finalize your Used EV Tax Credit for the 2025 tax year.

Key Details at a Glance

What This Opportunity Offers

The Used Clean Vehicle Credit wasn’t just a deduction; it was a dollar-for-dollar tax credit. This means it directly reduced the amount of tax you owed.

1. Significant Financial Relief For a used EV costing $20,000, the credit provided $4,000 in value. That effectively lowered the purchase price to $16,000, making EVs competitive with much older, higher-mileage gas cars.

2. Two Ways to Receive the Money Buyers in 2025 experienced this benefit in one of two ways:

• Point-of-Sale Transfer: You transferred the credit to the dealer and received an immediate $4,000 reduction in the purchase price. This was the most popular option.
• Tax Return Claim: You paid the full price upfront and are now waiting to claim the $4,000 as a credit on your tax return to increase your refund or lower your tax bill.

3. No Recapture for Zero Liability (Point-of-Sale Only) One of the most unique features of the 2025 program was the “no recapture” rule for tax liability. If you transferred the credit at the dealership but end up having zero tax liability for the year, the IRS does not make you pay it back. This was a massive benefit for lower-income buyers who might not have owed $4,000 in federal taxes.

Who Is Eligible to Claim (Retrospectively)

Since the purchase window has closed, eligibility now depends on whether your purchase met the criteria at the time. You can claim this credit if:

1. You Bought Before the Cutoff You must have taken delivery of the vehicle on or before September 30, 2025. If you bought on October 1, 2025, you are unfortunately out of luck due to the legislative change that ended the program early.

2. You Meet the Income Requirements Your Modified Adjusted Gross Income (MAGI) must be below the following thresholds for either the year you bought the car (2025) OR the year before (2024):

• $150,000 for married couples filing jointly.
• $112,500 for heads of households.
• $75,000 for all other filers (single).

3. The Vehicle Qualified

• Price: The sale price was $25,000 or less (excluding taxes/fees).
• Age: The car was at least 2 model years old (e.g., a 2023 model or older).
• History: It was the first retail sale of the vehicle since the credit began (August 2022).
• Dealer: You bought it from a dealership, not a private seller.

Insider Tips for a Winning Tax Return

Filing for this credit can be tricky. Here are the tips that tax professionals use to ensure the claim goes through smoothly.

1. Locate Your “Time of Sale” Report This is the “Golden Ticket.” When you bought the car, the dealer should have submitted a report to the IRS and given you a copy. It contains the VIN, sale price, and confirmation number.

• Tip: If you lost it, call the dealership immediately. They can reprint it from the IRS Energy Credits Online portal. You cannot file Form 8936 without the information on this report.

2. Use the “Two-Year” Income Lookback You only need to qualify based on income in one of the two years.

• Scenario: You made $80,000 in 2025 (too high for single filers), but you made $70,000 in 2024.
• Strategy: You qualify! On Form 8936, you will use your 2024 MAGI to prove eligibility. This flexibility saves thousands of applicants from disqualification.

3. Double-Check the VIN Character A common rejection reason is a typo in the VIN. The IRS matches the VIN on your tax return against the VIN the dealer submitted. If they don’t match exactly, your refund is frozen.

• Tip: Verify the VIN on your sales contract against the VIN on the Time of Sale report. If they differ, the dealer made a mistake, and they need to fix it in the portal before you file.

4. Don’t Forget State Rebates Many states (like California, Massachusetts, and Colorado) had their own used EV rebates that stacked with the federal one.

• Tip: Check your state’s revenue department website. Unlike the federal credit, some state programs might still have open application windows or retroactive claiming periods.

Application Timeline (Tax Season 2026)

Since the purchase phase is over, your timeline is now dictated by the tax calendar.

January 2026: Gather Documents

• Find your purchase agreement.
• Locate the Time of Sale Report provided by the dealer.
• Wait for your W-2s and 1099s to calculate your MAGI.

February 2026: Verify Dealer Submission

• If you haven’t received confirmation that the dealer submitted the report, call them. The IRS must have received the dealer’s report within 3 days of the sale. If they forgot, they need to fix it now, or your credit will be denied.

March - April 15, 2026: File Taxes

• File your federal tax return (Form 1040).
• Include Form 8936 (Clean Vehicle Credits).
• If you used tax software (TurboTax, H&R Block), search for “EV Credit” to find the specific section.

Required Materials

To claim the credit successfully, have these items on your desk when you file:

1. Vehicle Identification Number (VIN): Must match the dealer’s report.
2. Sale Date: Must be on or before 09/30/2025.
3. Sale Price: Must be $25,000 or less.
4. Dealer’s Tax ID (TIN): Often required to identify the seller.
5. IRS Time of Sale Report: The confirmation document from the dealer.
6. Prior Year Tax Return (2024): If you are using the income lookback rule.

What Makes an Application Stand Out

In the context of a tax return, “standing out” is a bad thing. You want your application to be boring, accurate, and instantly approved.

Consistency is Key. The IRS computer system performs an automatic “matching” process. It compares the data on your Form 8936 with the data in the IRS Energy Credits Online database (populated by dealers).

• Perfect Match: Refund approved.
• Mismatch: Audit/Delay.

Ensure that the “Placed in Service” date you enter is the exact date on your sales paperwork. Even a one-day difference can trigger a flag.

Common Mistakes to Avoid

1. Filing Without the Dealer Report You cannot simply claim the credit because you bought a used EV. If the dealer didn’t register the sale with the IRS, the credit does not exist in the IRS system.

• Fix: Confirm the dealer submission before you file.

2. Exceeding the Income Limit If your income increased significantly in 2025 and was also high in 2024, you might be ineligible.

• Consequence: If you took the $4,000 at the dealership but don’t qualify based on income, you must pay it back when you file taxes. This is the one scenario where recapture is mandatory.

3. Claiming on a Private Sale Did you buy that Tesla from your neighbor?

• Mistake: Trying to claim the credit for a private party sale.
• Reality: Only dealer sales qualify. There is no workaround.

4. Forgetting the “3-Year Rule” You can only claim the Used EV credit once every 3 years. If you claimed it in 2023 or 2024, you cannot claim it again for a 2025 purchase.

Frequently Asked Questions

I got the $4,000 off at the dealer. Do I still need to file Form 8936? YES. You must file the form to report the purchase and prove your eligibility (income limits). If you don’t file, the IRS may consider the $4,000 an overpayment and demand it back.

What happens if my income is too high? If your MAGI for both 2024 and 2025 exceeds the limits ($75k/$112.5k/$150k), and you already took the $4,000 discount at the dealer, you will have to repay the full $4,000 to the IRS when you file your tax return.

Can I claim the credit if I bought the car on October 1, 2025? No. The program expired on September 30, 2025. Purchases made after this date are not eligible for the federal credit, regardless of the vehicle’s price or your income.

Does the credit apply to hybrids? Yes, Plug-in Hybrid Electric Vehicles (PHEVs) qualify if they have a battery capacity of at least 7 kWh. Common models like the Chevy Volt, Toyota Prius Prime, and Ford Fusion Energi often qualify.

What if the dealer refused to do the paperwork? If the dealer did not submit the Time of Sale report to the IRS, you cannot claim the credit. It is the buyer’s responsibility to ensure this is done at the time of sale. You can try contacting the dealer now to see if they can submit it retroactively, but success is not guaranteed.

Next Steps

If you purchased a qualified vehicle in 2025, your focus now is on tax preparation.

1. Locate your documents immediately.
2. Check your income for 2024 and 2025 to see which year qualifies you.
3. File Form 8936 with your tax return.

For more details on the forms and rules, visit the official IRS page below.

Official IRS Used Clean Vehicle Credit Page