Deductions & credits

There is not a specific time frame that she must own it to not have to pay back the credit. However, if she bought the car with the intention of selling the car, then she was not eligible for the credit. As one of the criteria to claim the credit is that you must not purchase it with the intention of reselling it, it has to be for personal use.

The 3 years applies to eligibility to claim the credit.  If she claimed the credit in 2024, she would not be eligible for claim it again until after the 3 year mark in 2027. 

In order for her not to have to repay the credit, she simply must still be eligible for the credit.  In order to qualify, one must meet the following criteria:

• You must NOT be the original owner
• You must NOT be claimed as a dependent on another persons tax return
• You must NOT have claimed a used vehicle credit in the past 3 years
• You must be the person who bought the vehicle for use and not for resale
• Your AGI cannot be greater than:
  • $150,000 for Married Filing Jointly
  • $112,500 for Head of Household
  • $75,000 for all other filers
    • You can use your AGI from the year you buy the vehicle or the year before if your income would qualify in one year but not the other. 

For the vehicle to qualify the following has to be met:

• At least 2 years older than the current model year
• Must have a sales prices of no more than $25,000
• Be used primarily in the US
• Have a GVWR of less than 14,000lbs
• Cannot have been used for a used vehicle credit previously
• Bought from a dealer (cannot be a private sale)
• The dealer must report certain information to you at the time of the sale

This Credit is Non-Refundable. meaning she must have a tax liability to use the credit against and the credit cannot be carried forward.  The Used EV Credit is worth 30% of the purchase price up to $4,000

Click here to see if your make and model qualify.

Be aware, that if she sold the car shortly after purchasing it, it is possibly that she will have to report a gain on the sale as she would have to reduce the basis of the car by the credit she received.  This means if she paid $25,000 for the car and received a $4,000 credit, her basis would be $21,000.  If she then sold the car for $25,000, she would have a $4,000 capital gain that she would need to report on her return. 

(Edited 1/28/2025 @12:29PM PST) @RandysF