The electric car tax credit is an incentive created by Congress with bipartisan support during the George W. Bush administration to support the purchase of electric vehicles. It can be claimed on individual tax returns the year the car was purchased, or alternatively can be claimed by the car dealer in order to lower the monthly cost of a leased plug-in vehicle.
According to the U.S. Department of Energy, “All-electric and plug-in hybrid cars purchased new in or after 2010 may be eligible for a federal income tax credit of up to $7,500.” The value of the tax credit varies depending on battery size and starts to phase out to zero over time after each respective manufacturer sells a certain number of plug-in vehicles. *To find the value of the tax credit for each plug-in vehicle on the market today, see FuelEconomy.gov.
Though these are often portrayed as subsidies, Congress defined the tax credit as a tax incentive. Certain states offer rebates as an added incentive, while many others offer their own additional tax credits to be processed on state tax returns.
To utilize the federal EV tax credit, see IRS Form 8936.
Many state and local governments and utilities also offer a variety of EV incentives, including rebates on your vehicle and/or charging station, discounted electric rates, and carpool lane access. To find additional incentives in your area, visit PlugStar.com/incentives. We also recommend contacting your electric utility to see if they offer additional incentives.
Further reading:
- U.S. Department of Energy: “Federal Tax Credits for New All-Electric and Plug-in Hybrid Vehicles”
- CreditKarma: “How do electric car tax credits work?”
- KochvsClean: “The Electric Car Tax Credit Benefits Drivers of All Income Levels”
