--- kind: "section" citation: "26 U.S.C. § 25E" title: "26" title_heading: "Internal Revenue Code" number: "25E" heading: "Previously-owned clean vehicles" release: "119-102" date: "2026-07-12" url: "https://uscodex.org/usc/26/25E" units: - "Subtitle A — Income Taxes" - "Chapter 1 — Normal Taxes and Surtaxes" - "Subchapter A — Determination of Tax Liability" - "Part IV — Credits Against Tax" - "Subpart A — Nonrefundable Personal Credits" --- # §25E. Previously-owned clean vehicles - (a) **Allowance of credit—** In the case of a qualified buyer who during a taxable year places in service a previously-owned clean vehicle, there shall be allowed as a credit against the tax imposed by this chapter for the taxable year an amount equal to the lesser of— - (1) $4,000, or - (2) the amount equal to 30 percent of the sale price with respect to such vehicle. - (b) **Limitation based on modified adjusted gross income—** - (1) **In general—** No credit shall be allowed under [subsection (a)](#a) for any taxable year if— - (A) the lesser of— - (i) the modified [adjusted gross income](/usc/26/62.md?p=a) of the [taxpayer](/usc/26/1313.md?p=b) for such taxable year, or - (ii) the modified [adjusted gross income](/usc/26/62.md?p=a) of the [taxpayer](/usc/26/1313.md?p=b) for the preceding taxable year, exceeds - (B) the threshold amount. - (2) **Threshold amount—** For purposes of [paragraph (1)(B)](#b-1-B), the threshold amount shall be— - (A) in the case of a [joint return](/usc/26/62.md?p=b-3-D) or a [surviving spouse](/usc/26/2.md?p=a-1) (as defined in [section 2(a)](/usc/26/2.md?p=a)), $150,000, - (B) in the case of a head of household (as defined in [section 2(b)](/usc/26/2.md?p=b)), $112,500, and - (C) in the case of a [taxpayer](/usc/26/1313.md?p=b) not described in subparagraph [(A)](#b-2-A) or [(B)](#b-2-B), $75,000. - (3) **Modified adjusted gross income—** For purposes of this subsection, the term “modified [adjusted gross income](/usc/26/62.md?p=a)” means [adjusted gross income](/usc/26/62.md?p=a) increased by any amount excluded from gross income under section [911](/usc/26/911.md), [931](/usc/26/931.md), or 933. - (c) **Definitions—** For purposes of this section— - (1) **Previously-owned clean vehicle—** The term “previously-owned clean vehicle” means, with respect to a [taxpayer](/usc/26/1313.md?p=b), a motor vehicle— - (A) the model year of which is at least 2 years earlier than the calendar year in which the [taxpayer](/usc/26/1313.md?p=b) acquires such vehicle, - (B) the original use of which commences with a person other than the [taxpayer](/usc/26/1313.md?p=b), - (C) which is acquired by the [taxpayer](/usc/26/1313.md?p=b) in a qualified sale, and - (D) which— - (i) meets the requirements of subparagraphs [(C)](#c-1-C), [(D)](#c-1-D), (E), (F), and (H) (except for clause (iv) thereof) of [section 30D(d)(1)](/usc/26/30D.md?p=d-1), or - (ii) is a motor vehicle which— - (I) satisfies the requirements under subparagraphs [(A)](/usc/26/30B.md?p=b-3-A) and [(B)](/usc/26/30B.md?p=b-3-B) of section 30B(b)(3), and - (II) has a gross vehicle weight rating of less than 14,000 pounds. - (2) **Qualified sale—** The term “qualified sale” means a sale of a motor vehicle— - (A) by a dealer (as defined in [section 30D(g)(8)](/usc/26/30D.md?p=g-8)), - (B) for a sale price which does not exceed $25,000, and - (C) which is the first transfer since the date of the enactment of this section to a qualified buyer other than the person with whom the original use of such vehicle commenced. - (3) **Qualified buyer—** The term “qualified buyer” means, with respect to a sale of a motor vehicle, a [taxpayer](/usc/26/1313.md?p=b)— - (A) who is an individual, - (B) who [purchases](/usc/26/1361.md?p=e-1-C) such vehicle for use and not for resale, - (C) with respect to whom no deduction is allowable with respect to another [taxpayer](/usc/26/1313.md?p=b) under [section 151](/usc/26/151.md), and - (D) who has not been allowed a credit under this section for any sale during the 3-year period ending on the date of the sale of such vehicle. - (4) **Motor vehicle; capacity—** The terms “motor vehicle” and “capacity” have the meaning given such terms in paragraphs [(2)](/usc/26/30D.md?p=d-2) and [(4)](/usc/26/30D.md?p=d-4) of section 30D(d), respectively. - (d) **VIN number requirement—** No credit shall be allowed under [subsection (a)](#a) with respect to any vehicle unless the [taxpayer](/usc/26/1313.md?p=b) includes the vehicle identification number of such vehicle on the return of tax for the taxable year. - (e) **Application of certain rules—** For purposes of this section, rules similar to the rules of [section 30D(f)](/usc/26/30D.md?p=f) (without regard to paragraph (10) or (11) thereof) shall apply for purposes of this section. - (f) **Transfer of credit—** Rules similar to the rules of [section 30D(g)](/usc/26/30D.md?p=g) shall apply. - (g) **Termination—** No credit shall be allowed under this section with respect to any vehicle acquired after September 30, 2025. ## Source credit (Added and amended Pub. L. 117–169, title I, § 13402(a), (b), Aug. 16, 2022, 136 Stat. 1962, 1963; Pub. L. 119–21, title VII, § 70501, July 4, 2025, 139 Stat. 250.) ## Notes ### Editorial Notes ### References in Text The date of the enactment of this section, referred to in subsec. (c)(2)(C), is the date of enactment of Pub. L. 117–169, which was approved Aug. 16, 2022. ### Amendments 2025—Subsec. (g). Pub. L. 119–21 substituted “September 30, 2025” for “December 31, 2032”. 2022—Subsecs. (f), (g). Pub. L. 117–169, § 13402(b), added subsec. (f) and redesignated former subsec. (f) as (g). ### Statutory Notes and Related Subsidiaries ### Effective Date Pub. L. 117–169, title I, § 13402(e), Aug. 16, 2022, 136 Stat. 1964, provided that: In general.—Except as provided in paragraph (2), the amendments made by this section [enacting this section and amending this section and section 6213 of this title] shall apply to vehicles acquired after December 31, 2022. Transfer of credit.—The amendments made by subsection (b) [amending this section] shall apply to vehicles acquired after December 31, 2023.”