New plug-in hybrid electric vehicles (PHEVs) are eligible for a federal tax credit of up to $7,500, but the exact amount depends on factors such as the vehicle’s battery capacity, MSRP limits, assembly location, and manufacturer sales volume. The credit amount is generally calculated based on battery capacity, starting at a minimum of $2,500 for a 4 kWh battery and increasing by about $417 for each additional kWh, subject to efficiency and emissions formulas. Additionally, new PHEVs must meet MSRP price caps ($55,000 for most vehicles, $80,000 for SUVs, trucks, and vans) and must be assembled in North America to qualify. The tax credit phases out once a manufacturer sells a set number of qualifying vehicles.
For used PHEVs, the tax credit is different and typically lower, reflecting the vehicle’s status as pre-owned rather than new. While detailed dollar amounts can vary depending on the program year and specific legislation, the federal tax credit for used PHEVs is significantly less than the maximum available for new vehicles. In general, the used vehicle credit is designed to incentivize the purchase of electric vehicles in the secondary market but is capped at a much lower amount (for example, some programs have caps around $2,500 to $4,000). The eligibility rules for used PHEVs also differ and may include vehicle price caps, age limits, and mileage restrictions to ensure the incentive targets more affordable used EVs and PHEVs.
In summary:
| Feature | New PHEVs | Used PHEVs |
|---|---|---|
| Maximum federal tax credit | Up to $7,500 | Typically lower (e.g., ~$2,500-$4,000) |
| Credit calculation | Based on battery size, emissions, MSRP, assembly location | Lower flat or percentage credit, often capped |
| MSRP limits | $55,000 for most; $80,000 for SUVs, trucks | Price caps apply, often lower limits |
| Assembly location | Must be North American-assembled | Varies, usually same rules about vehicle origin |
| Phaseout rules | Manufacturer sales volumes impact credit | Not applicable or different rules |
Therefore, new PHEVs generally qualify for higher and more complex tax credits tied to technical and manufacturing criteria, while used PHEVs qualify for smaller credits intended to promote secondary market adoption.
Original article by NenPower, If reposted, please credit the source: https://nenpower.com/blog/how-do-the-tax-credits-for-new-phevs-compare-to-those-for-used-ones/
