Does used EV pricing already include tax credits?

Electric Models Forum
1

I’m confused about how dealers are pricing used EVs.

For the used EV tax credit, the vehicle needs to be at least 2 years old and priced under $25,000.

I saw a 2021 Mach E listed for $21,800, but the dealer notes that the price “includes the EV tax credit.” Doesn’t that mean the car was really $25,800 before the credit, which makes it ineligible?

Another car is listed at $24,000 with the same note about the tax credit. So, before the credit, the car is $28,000, which also shouldn’t qualify.

What’s going on here? Are dealers bending the rules or just misinforming buyers?

2

That sounds like the dealer might be doing something shady. Check these references for clarity:

Dealers might be exploiting a misunderstanding of how the tax credit works.

3

From what I’ve seen, the car gets listed at $25,000, then they subtract $4,000 for the credit. But they tack on fees later, maybe separately, so it doesn’t cause IRS problems.

4

MALIA said:
From what I’ve seen, the car gets listed at $25,000, then they subtract $4,000 for the credit. But they tack on fees later, maybe separately, so it doesn’t cause IRS problems.

So, they list the car for $25,000, take off the $4,000 for the credit, bringing it to $21,000, but then add $3,000 in fees to basically cancel out the tax credit?

5

@Uma
Yeah, but that’s not how it’s supposed to work. The credit only applies if the total sale price, including all dealer fees, stays under $25,000.

6

Dezi said:
@Uma
Yeah, but that’s not how it’s supposed to work. The credit only applies if the total sale price, including all dealer fees, stays under $25,000.

They’re probably trying to squeeze under the rules. The IRS says:

The vehicle’s sale price must be $25,000 or less, including delivery charges and after applying incentives, but not counting taxes or state-required fees.

They likely label extra charges as “separately-stated fees” to stay just within the limit.

7

@Uma
Yeah, it’s frustrating, but sometimes, even with those fees, it could still be a decent deal depending on the dealer.

8

@Uma
Exactly.

9

Cars that should be around $20,000 are getting marked up to just under $25,000 so dealers can cash in on the rebate. Buyers lose out.

10

Honestly, just ask the dealer directly. Some of them don’t even seem to understand how the tax credits work.

11

If a dealer is including the tax credit to push the price under $25,000, they’re definitely scamming the buyer and risking issues with the IRS.

12

The rules say:

“The sale price must be $25,000 or less, including all dealer-imposed fees. Taxes and state-required fees are excluded.”

But it seems like dealers are bending this.

13

Sky said:
The rules say:

“The sale price must be $25,000 or less, including all dealer-imposed fees. Taxes and state-required fees are excluded.”

But it seems like dealers are bending this.

Right, but they always say “taxes and fees not included.” So, if the sale price is $24,000 after the credit, doesn’t that mean the real price is higher?

14

You could go the private-party route and use a service like KeySavvy to get the tax credit:

KeySavvy - Private EV Sales

Or buy used from Hertz or Tesla. They tend to stick to the rules better.

15

For the tax credit, the vehicle has to be priced at $20,999 or less after the $4,000 credit. If the car was originally $24,999 or less, it would qualify. But many dealers seem to mess this up.

16

Noor said:
For the tax credit, the vehicle has to be priced at $20,999 or less after the $4,000 credit. If the car was originally $24,999 or less, it would qualify. But many dealers seem to mess this up.

Exactly. So how can dealers list a car at $24,000 and claim that price already includes the tax credit?

17

Noor said:
For the tax credit, the vehicle has to be priced at $20,999 or less after the $4,000 credit. If the car was originally $24,999 or less, it would qualify. But many dealers seem to mess this up.

The threshold is $25,000. Check out Section 25E(c)(2)(B) of the code.

18

I looked recently and most of the options were overpriced and high mileage junk. The $4,000 tax credit feels like a bait-and-switch.

19

When I bought my EV, I ran into this too. Dealers try to manipulate the rebate rules. If the car’s price is $25,000 after the rebate, it doesn’t qualify. Don’t let them fool you into thinking it does.

20

I work at a dealership, and many of them really don’t understand the credit. They mix things up, and buyers are left dealing with the confusion.