EVs are in their infant stage and need all the help they can get to become more commonplace. This is why governments at different levels are offering EV tax credits and rebates. If you are in the US and plan to buy your own EV, the rest of the article is your guide to the US electric car tax credits and rebates.
Why do governments offer electric car tax credits and rebates?
Electric cars are cheaper to ‘fuel’ because electricity is conventionally cheaper and more stable in price than gas. However, electric vehicles are significantly more expensive. For example, the most affordable Tesla car, the Model 3, has a base price of $47,000. Even other EVs with lesser MRSPs have markups added by dealers. This makes EVs outreach for many car buyers, but the introduction of tax credits and rebates can help buyers pay less. As a result, ICE drivers will become more willing to consider switching to electric cars.
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How do the US electric car tax credit and rebates work?
The most popular EV incentive is the federal income tax credit, announced under the Energy Improvement and Extension Act of 2008. It is worth up to $7,500. However, there are some conditions to claiming the tax credit.
The credit is deducted from your federal income tax for the calendar year you bought your electric car. This means you must inform your account of your purchase. If your tax for the year is less than $7,500, the balance cannot be carried forward to the following year. This means if your tax for the year is $3,500, you can only claim that amount, and the remaining $4,000 is forfeited.
However, if you had purchased a hybrid (the hybrid must be plug-in to qualify) instead of a fully electric model, your tax credit would be less. The lowest tax credit you can claim is but the actual amount depends on your battery size. So if you buy a Toyota Prius, you will get less tax credit than your colleague that purchased a Chevy Bolt.
Not all-electric cars qualify for the federal tax credit
One criterion is the number of electric vehicles sold by the auto company in question in the US. in full as it will be slashed at six months intervals twice before it disappears completely. Tesla has sold more than that, so no EV from the company qualifies. Toyota may soon outgrow the credit too. Check for the brand you want to buy to be sure you can take advantage of the tax credit.
Your EV must also have an external plug-in recharge source
Apart from the federal tax credit, you may qualify for other incentives based on where you live. For example, in California, the undisputed leader in electric vehicles in the country, you may be eligible for the Clean Vehicle Rebate Project, CVRPadministered by the state’s Air Resources board.
CVRP offers rebates of up to $7,000 on each electric vehicle. The impact is being felt already, as California reports that zero-emissions cars account for 16.2 percent of all new.
To qualify for the CVRP rebate, your electric car must not cost over $45,000. This means no Tesla car qualifies for this rebate. However, less expensive models like the Chevy Bolt and the new Ford F-150 Lightning can earn the rebate.
In New York, EV buyers can get a rebate of up to $2,000 on new battery-powered automobiles under the “Drive Clean” program. However, you must agree to keep the vehicle for at least three years and be resident in the state.
Other sources of EV incentives include local utilities or energy departments. For example, Rocky Mountain Power will give you a rebate worth $200 when you buy and install a home EV charging station.
By combining all the EV incentives available to you, you can significantly reduce the amount of money you spend on your EV.
The future of electric car tax and rebates in the US
EV car tax and rebates may not last forever. However, they do not appear to be ending anytime soon. For example, the present administration is pushing to extend the federal tax credit so that all EV makers qualify again and even. Similarly, the ARB wants to increase the rebate amount by about $500.
Many new EV buyers in the US will qualify for at least one of these EV tax credits. When you are ready to buy your own electric car, you can check the ones available to you to make the switch less expensive.
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