How To Save Money When Purchasing A Used Electric Vehicle

Background
Electric vehicles (EVs) use an electric motor instead of an internal combustion engine, which is used in gas-powered vehicles. EVs use an internal battery to power the electric motor and have fewer moving parts than gas-powered vehicles. EVs do not need oil changes, spark plugs, or fuel filters, making their maintenance costs lower than gas-powered vehicles. The U.S. Department of Energy’s Local Fuel Savings Calculator is a useful tool to determine how much money you can save when you switch to an EV. In addition, as part of the federal Inflation Reduction Act, you may be able to use a tax credit to purchase a used EV (see below).

Federal Tax Credit and Requirements
1. Federal Used Clean Vehicle Credit
a. The federal tax credit to purchase a used EV was effective as of January 1, 2023. Any used EV purchased before that time does not qualify.
b. The tax credit equals 30% of the sale price with a maximum credit of $4,000. To qualify, the sales price of the vehicle must be $25,000 or less including all dealer-imposed costs or fees not required by law. It does not pertain to costs or fees required by law, such as taxes or title and registration fees.
c. Starting January 1, 2024, tax credit eligibility and the amount is determined at the time of sale by the dealer using the IRS Energy Credits Online tool.
d. The Used Clean Vehicle Tax Credit can be immediately applied toward the amount you pay for the vehicle by transferring the credit to the dealer or you can instead file form 8936 when you file your tax return.

2. IRS requirements
a. The EV must be purchased for your use and not for resale, and must be purchased from a registered dealer.
b. The EV must primarily be used in the U.S.
c. To be eligible, you may not have claimed another used clean vehicle credit in the three years before the purchase date. You also may not be claimed as a dependent on another person’s tax return.
d. Your modified adjusted gross income (AGI) may not exceed in either the year you take delivery of the vehicle or the year before:
i. $150,000 for married filing jointly or a surviving spouse
ii. $112,500 for heads of households
iii. $75,000 for all other filers
e. The dealer is required to report information, including your name and taxpayer identification number, to the IRS and provide you with a paper copy of the time-of-sale report to claim the tax credit.

3. Vehicle qualifications
a. As stated above, the sales price of the vehicle must be $25,000 or less including all dealer-imposed costs or fees not required by law. It does not pertain to costs or fees required by law, such as taxes or title and registration fees.
b. The model year must be at least two years earlier than the calendar year when you purchase the vehicle.
c. The vehicle must not have already been transferred to a qualified buyer after August 16, 2022.
d. The gross vehicle weight rating must be less than 14,000 pounds.
e. The vehicle must have a battery capacity of at least 7kWh.

Arizona Related Benefits
a. Arizona Public Service, Salt River Project, and Tucson Electric Power have programs to save EV owners money. The programs, which differ for each utility, range from an EV rate plan to financial support to help purchase an EV charger for your home.
b. EVs in Arizona are exempt from emissions testing requirements.
c. EVs in Arizona are considered an Alternative Fuel Vehicle (AFV) and are able to use the High Occupancy Vehicle (HOV) freeway lanes at any time regardless of the number of passengers, provided the vehicle has a current AFV license plate.

In addition, there are significant financial and air quality benefits for local governments in our state to replace retiring light-duty cars and trucks with EVs. Learn more in Electric Fleets for Arizona and Electric Vehicles Save Money for Government Fleets, reports by the Arizona PIRG Education Fund and Frontier Group.

If you or someone you know need help paying for utility bills or appliances — including air conditioning, you can contact Wildfire, a non-profit organization with partnerships across the state of Arizona. The Arizona Department of Economic Security (ADES), through the Low Income Energy Assistance Program (LIHEAP), offers additional help with utility bills for qualified households.

*Please note the above information taken from federal government and Arizona utility websites is subject to change. We recommend checking the relevant website(s) for updates. We also recommend checking out our webpage for additional opportunities to save money and save energy: www.savingenergytips.org

For more information: [email protected] or (602)252-9227.