Where Can You Get the Best EV Tax Credit in the U.S.
Ultimate 2019 Guide To the EV Tax Credit, EV Incentives and Rebates You Can Get In The U.S.by Safet Satara, on
Ever since the Obama administration released the EV Tax Credit to push car electrification and incite manufacturers to produce electric cars, consumers became eligible for the so-called EV Tax Credit. The government incentive worked well, but the $7,500 EV Tax Credit isn’t the only incentive you can receive while buying an electric car. In fact, with the White House’s intention to end subsidies for EV purchases, it may seem that the EV Tax Credit is on its last leg. However, there’s still a lot of time for you to buy an electric car and claim all the rebates eligible to you. Apart from the nation-wide EV Tax Credit, some states offer additional incentives. They can be so huge that, if played right and in the right place, you can buy the $35,000 Tesla Model 3 for $26,250. In this article, I will answer all the obvious questions about the EV Tax Credit, rebates, and incentives for the purchase of the electric cars and plug-in hybrids.
What Cars Are Eligible For The EV Tax Credit?
All new electric cars and plug-in hybrids sold in the U.S. are eligible for the EV Tax Credit. The full list of the vehicles eligible is available at the FuelEconomy.gov website. The record does not only show the cars for which you can claim the EV Tax Credit rebate, but it also shows the amount of the federal tax credit available for each vehicle based on the capacity of the battery used to power it.
Aside from the apparently eligible EV's like the e-Golf, BMW i3, Toyota Prius Prime, or the Hyundai Ioniq Electric and Plug-In Hybrid, the EV Tax Credit is available for the purchase of some lesser known EV cars.
Including the Karma Revero, certain electric Zenith minibusses, and even Chinese Kandi electric cars.
The rules are seemingly simple:
- The EV and plug-in hybrid cars need to be built by a credible manufacturer.
- They need to have a batter of 4 kWh or larger
- They have to be new
- They have to be primarily used in the U.S.
Hybrids, vehicles propelled by an engine that runs on clean diesel, or cars with other alternative fuel sources (for example, hydrogen), are not eligible for the EV Tax Credit. They, however, may or may not be suitable for certain state-specific incentives and rebates.
How Much Can You Save With The EV Tax Credit?
The savings from the EV Tax Credit solely depends on the type of car you intend to buy. The credit amount varies based on the capacity of the battery inside. A bigger battery in the vehicle will get you higher EV Tax Credit benefit.
However, the Chrysler Pacifica Plug-in Hybrid, for example, is eligible for a full EV Tax Credit incentive despite not being a full EV. It has a 500-pound, 16-kWh battery pack inside.
On the other hand, the Porsche Panamera 4 e-Hybrid has a 14-kWh battery inside, but it is eligible for $6,670 credit, meaning that the full $7,500 tax credit is eligible for electrified vehicles whose battery capacity is, roughly estimated, larger than 14-kWh. On the other end, vehicles with a battery capacity of close to 4 kWh (like the 2013 Toyota Prius Plug-in Hybrid with a battery capacity of 4.4 kWh) are eligible for an EV Tax Credit of $2,500. If you want a plug-in hybrid that is eligible for a full EV tax Credit you better find one with a massive battery pack.
Aside from the fantastic Chrysler Pacifica Plug-In Hybrid, those are:
- Karma Revero (21.4-kWh battery pack)
- Honda Clarity Plug-In Hybrid (17-kWh battery pack)
- Chevrolet Volt (18.4-kWh battery pack)
- BMW i3s REx (33.2-kWh battery pack)
Additional State-Specific EV Credits, Rebates, and Incentives
Aside from the federal EV Tax Credit of up to $7,500 for the purchase of a new electric or plug-in hybrid vehicle, many states offer additional rebates and incentives. You can add them to the $7,500 EV Tax Credit, and if lucky, end up saving even more than $10,000 buying a new car with an electric or plug-in hybrid propulsion system.
EnergySage researched the credits and incentives across the nation, and I bring you here a full list of incentives, tax credits, and rebates U.S. states offer if you’re looking to buy an electric or plug-in hybrid car. Remember, this piles on top of the EV Tax Credit.
- Plug-In Hybrid and Zero Emission Light-Duty Vehicle Rebates
Rebates for the purchase or leasing of AEVs and PHEVs with vehicles purchased before March 28, 2016 eligible for $5,000 in rebates. For vehicles purchased after March 28, 2016, rebates are based on gross annual income.
- Alternative Fuel and Advanced Vehicle Rebate (San Joaquin Valley)
$3,000 rebates for qualifying electric vehicles purchased by residents and businesses located in the San Joaquin Valley.
- Plug-In Electric Vehicle (PEV) Tax Credit
A credit of $5,000 for purchase or conversion, and $2,500 for a lease of light-duty EVs or PHEVs.
For light-duty, medium-duty, and heavy-duty electric trucks the credits are $7,000 purchase/$3,500 lease, $10,000 purchase/$5,000 lease, and $20,000 purchase/$10,000 lease, respectively. All of these tax credit amounts will decrease in 2020.
- Hydrogen and Plug-In Electric Vehicle (PEV) Rebate
Rebates for the purchase or lease of all-electric vehicles and plug-in hybrid electric vehicles. The amounts are based on battery capacity: $3,000 for PHEVs with battery capacity greater than 18-kWh, $1,500 for batteries between 10-kWh and 18-kWh, and $750 for cars with batteries less than 10-kWh.
For AEVs, the rebate amounts are the same, but the battery cut offs are greater than 25-kWh, 20 to 25kWh, and less than 20-kWh. In addition, the rebate covers hydrogen fuel cell electric vehicles with a flat rebate of $5,000.
- Alternative Fuel Vehicle (AFV) Rebate
Rebates for vehicles purchased between November 1, 2016 and June 30, 2018. AEV purchasers receive a rebate of $3,000 and PHEV purchasers receive $1,500.
- Electric Vehicle Supply Equipment (EVSE) Rebates
Offers rebate amounts for 50-percent of the cost of a residential charging station and 75-percent of the cost of commercial and workplace charging stations.
- Electric Vehicle Supply Equipment (EVSE) Tax Credit
Eligible business enterprises receive an income tax credit for the purchase or lease of EVSE when the equipment is in the state and open to the public.
- Electric Vehicle Supply Equipment (EVSE) Rebates
Covers 50% of the cost of equipment and installation of charging equipment with SAE J1772 or CHAdeMo connectors. This rebate is up to $3,750 per networked single station; $3,000 per non-networked single station along with larger rebates for larger dual and fast charge stations.
- Electric Vehicle Supply Equipment (EVSE) Rebate Program
Offers individuals $700 for the cost of acquiring and installing qualified charging equipment.
- Plug-In Electric Vehicle (PEV) Tax Credit
As of July 1, 2017 allows purchasers of qualified vehicles to apply for a tax credit of up to $3,000 calculated at $100 per kWh of battery capacity.
- Massachusetts Plug-In Electric Vehicle (PEV) Rebates
Rebates of up to $2,500 to customers purchasing or leasing a plug-in electric vehicle. The rebate application must be submitted within three months of the customer’s purchase or lease date.
- Alternative Fuel Vehicle (AFV) Conversion Tax Credit
Income tax credit of up to 50% for the equipment and labor costs of converting vehicles to alternative fuels including electric. The maximum credit is $500 for vehicles with a gross vehicle weight rating (GVWR) of 10,000 pounds (lbs.) or less and $1,000 for vehicles with a GVWR of more than 10,000 lbs.
- Zero Emissions Vehicle (ZEV) Tax Exemption
Exempts AEVs (not PHEVs) from state sales tax and use tax when these vehicles are sold, rented, or leased in the state.
- Plug-In Electric Vehicle (PEV) Rebate Program
Rebates of up to $2,000 for the purchase or lease of eligible new plug-in electric vehicles. The amounts vary based on the vehicle’s all-electric range and suggested retail price.
- Alternative Fueling Infrastructure Tax Credit
Residential tax credit for 25-percent of alternative fuel infrastructure project costs including electric charging of up to $750 and the credit is available through the end of 2017.
- Alternative Fuel Vehicle (AFV) and Hybrid Electric Vehicle (HEV) Funding
Rebates to assist with the incremental cost of the purchase of all-electric vehicles and plug-in hybrid electric vehicles. The rebate amounts are $1,750 for qualified EVs and $1,000 for qualified PHEVs, and are available until 250 rebates are disbursed.
- Plug-In Electric Vehicle (PEV) Rebates
Rebates to state and municipal agencies for the purchase and installation of publicly accessible Level 2 or DC fast chargers. Agencies are eligible for up to $60,000 in incentives for charging stations that are installed and operational on or after July 1, 2016. Agencies that install EVSE also qualify for up to $15,000 to support the purchase or lease of a new PEV acquired on or after July 1, 2016.
- Clean Vehicle Replacement Vouchers
Provides vehicle replacement assistance for qualified individuals in the amount of $3,500 toward the purchase of a hybrid electric or battery electric vehicle.
- Light-Duty Alternative Fuel Vehicle Rebates
Program for the purchase or lease of new light-duty vehicle powered by compressed natural gas, propane, hydrogen, or electricity. Electric vehicles powered by a battery or hydrogen fuel cell are eligible for a rebate of $2,500, for the first 2,000 applicants.
- Qualified Heavy-Duty Alternative Fuel Vehicle (AFV) Tax Credit
Tax credits for heavy-duty electric vehicles with $25,000 in credit available in 2017, $20,000 in 2018, $18,000 in 2019, and $15,000 in 2020. At least 50-percent of the qualified vehicle’s miles must be driven in the state, and the credit expires at the end of 2020.
- Alternative Fuel Vehicle (AFV) Tax Exemption
Sales tax exemption, applies to up to $32,000 of a vehicle’s selling price or the total amount of lease payments made. This exemption expires July 1, 2019.
- Alternative Fuel Tax Refund for Taxis
Allows vehicles that transport passengers to be reimbursed for the paid amount of the Wisconsin state fuel tax. Refund claims must be filed within one year of the fuel purchase date.
States That Offer No EV Tax Incentives
On the other hand, these states do not offer any credits, incentives, or rebates for the purchase of the electric or Plug-In hybrid vehicle:
Alabama, Alaska, Arkansas, District of Columbia, Florida, Hawaii, Idaho, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Michigan, Minnesota, Mississippi, Missouri, Nebraska, Nevada, New Hampshire, New Mexico, North Dakota, Ohio, Oklahoma, South Carolina, South Dakota, Tennessee, Vermont, Virginia, West Virginia, Wyoming.
Furthermore, I did find out that, New Jersey, in fact, charges no sales tax on EVs.
When Will The EV Tax Credit Run Out?
It is bound to run out. If the White House and the Republicans don’t purge it from the system before then, the EV Tax Credit will reach its natural end after every manufacturer sells up to 200,000 electric or plug-in hybrid vehicles on the U.S. market. Governing bodies explained previously:
"Each independent automaker’s eligible plug-in vehicles receive a federal credit (up to $7,500) – until the 200,000th plug-in is registered inside the US, when a countdown for phaseout of the credit begins."
The phaseout process will work as follows:
After 200,000th registration of the vehicle that is eligible for the EV Tax Credit, the
EV Tax Credit will continue until the end of the current quarter and the completion of the next quarter.
Then, for the next six months, credit will be reduced by half (to $3,750). After that, it will be reduced further (to $1,875) before expiring six months later.
To better understand the logic behind this, I will give you an example.
Back on 31st July 2018, Tesla was the first to reach 200,000 vehicles that are eligible for the EV Tax Credit. However, due to regulations I explained above, everyone who bought a Tesla through the end of 2018 qualified for the EV Tax Credit. Tesla buyers are eligible for EV Tax Credit of $3.750 for the first six months of 2019, and $1,875 for the second half of 2019. The tax credit for Tesla cars entirely runs out with the start of 2020.
General Motors sold 200,000 EVs and PHEVs too, and it is precisely one quarter behind Tesla. Buyers of the GM-produced electric or plug-in hybrid vehicles are eligible for the EV Tax Credit until the end of the first quarter of 2020 (50-percent for Q2 and Q3 of 2019, and 25-percent for the Q4 2019, and Q1 2020).
Available Amount of the EV Tax Credit (2019 update)
While it seems that the consumers will run out of the EV Tax Credit for electric cars, I tend to disagree.
See, Tesla and GM are the only ones that sold 200,000 vehicles entitled for the EV Tax Credit.
The closest behind them in the EV and PHEV sales race is Nissan with 130,259 sold EVs and PHEVs. Then, we have Ford (113,132 sold units), Toyota (96,893 sold units), and BMW Group (83,630 sold units).
Everyone else is far behind. In reality, the EV Tax Credit is still far from exhaustion. The government and taxpayer’s money can partially finance the purchase of millions of additional EVs and PHEVs for years to come. If the current government does not abolish this incentive, that is.
Who Can Get The EV Tax Credit?
Well, anyone with the means to purchase or lease the vehicle. However, when leasing an EV or PHEV, the EV Tax Credit stays with the original buyer and owner. This means that they can lease you a vehicle without including the EV Tax Credit. Of course, I don’t think that anyone does it. The EV Tax Credit is usually calculated into the lease cost thus reducing the cost of payments. Bear in mind that you can’t get the EV Tax Credit buying a used EV or PHEV.
What Papers Do You Need To Become Eligible For The EV Tax Credit
Well, don’t read me here, but understand what Energy.gov website tells you:
"To claim the credit, fill out IRS Form 8936, Qualified Plug-in Electric Drive Motor Vehicle Credit. For vehicles acquired for personal use, report the credit from Form 8936 on the appropriate line of your Form 1040, U.S. Individual Income Tax Return. For vehicles purchased in 2010 or later, this credit can be used toward the alternative minimum tax (AMT). "
Cheapest States To Own An Electric Car
In my research, I did stumble upon a rather intriguing and comprehensive study about the cheapest states to own an electric car conducted by YourMechanic.com. YourMechanic.com researched factors like "the local cost of electricity, the ratio of charging stations to the population, and the rate of year-over-year EV sales increases."
The cheapest states to own an electric car are:
4. South Dakota
Interestingly enough, Maine, Iowa, Vermont, and South Dakota do not offer any state incentives for the purchase of the EV and PHEV cars, yet, they are on this list. For different reasons, mind you.
On the other hand, the research showed that Alaska, Alabama, Louisiana, New Jersey, and Wisconsin are the worst for electric car ownership.
Fun fact: Alaska has only nine EV charging stations which equal to one EV outlet for every 82,199 Alaskans.