Tax Incentives

Electric Car Tax Incentives and CreditsWhen you consider an electric vehicle, make sure you check on available tax credits and incentives. In addition to Federal tax credits, some states also offer tax credits and incentives.

Federally, tax credits are available up to $7,500, based on each vehicle’s traction battery capacity and the gross vehicle weight rating, as well as how many electric vehicles the manufacturer you are purchasing your vehicle from has sold to since the tax credit went into effect in 2010.

You will apply the Federal tax credit when completing your Federal tax return for the year in which you purchased the vehicle. EVs that are eligible include new qualified plug-in electric drive motor vehicles that draw propulsion using a traction battery that has at least five kilowatt-hours (kWh) of capacity, use an external source of energy to recharge the battery, have a gross vehicle weight rating of up to 14,000 pounds, and meet specified emission standards.

The minimum credit amount is $2,500, and the credit may be up to $7,500.

The credit will begin to be phased out for each manufacturer in the second quarter following the calendar quarter in which a minimum of 200,000 qualified plug-in electric drive vehicles have been sold by that manufacturer for use in the United States.

For more information, including qualifying vehicles and sales by manufacturer, see the Internal Revenue Service (IRS) Plug-In Electric Vehicle Credit website. Also refer to IRS Form 8936, which is available via the IRS Forms and Publications website.

(Reference Public Law 112-240, Section 403; and 26 U.S. Code 30D)

 

Resources

Plug-In Electric Drive Vehicle Credit (IRS Website)

 

Source:

U.S. DOE: Office of Energy Efficiency & Renewable Energy