Electric & Hybrid Tax Credits by State
In my most fuel efficient cars post, I highlighted the Nissan Leaf as the top mpg (equivalent) vehicle on the market for under $30K. But a key component of that was the U.S. federal tax credit of $7,500 knocking the sticker price down from $32,780 to $25,280.
I mentioned that some states further offered additional tax incentives on top of the federal credit, which prompted a reader to ask for a list of those states.
It was a great question. Without the tax incentives these vehicles just don’t make sense economically. With them, there is a chance they could actually make you money back by saving hundreds, if not thousands a year on fuel and maintenance costs. And if you can also sleep better at night for the added environmental benefit, why wouldn’t you?
Let’s first take a look at the federal tax credit and which vehicles can claim it.
Federal Electric Vehicle Tax Credit
Electric vehicle and hybrid tax credits are fairly straightforward at the federal level.
For starters, hybrid tax credits are a thing of the past at the federal level.
Electric vehicles are eligible for a $7,500 tax credit, with a few caveats:
- It must be purchased in or after 2010.
- You must be the original owner.
- To get the full credit, the vehicle must be within the first 200,000 of that model sold (then phase-out occurs).
You can see a full list of requirements at the Fueleconomy.gov electric vehicle tax credit site.
Now, there are even more vehicles (21 total) that qualify for the federal tax credit (if you can find them).
Electric Vehicle Tax Credits by State
Now comes the tricky part. Each state has slightly different electric and hybrid tax credits and incentives. I’ll highlight what I was able to dig up, but you will need to do some further digging and check with your state to make sure these incentives still apply (I just don’t have the resources to keep up with each state). If your state is not listed, my unearthing came up empty. If I missed something in your state, let me know and I’ll add it.
Rebates are available through the Clean Vehicle Rebate Project (CVRP) for the purchase or lease of qualified vehicles. Note that funds have currently been completely distributed. More funding has been requested and rebates of up to $2,500 for light-duty zero emission and plug-in hybrid vehicles has been proposed. You can get on a waiting list to be eligible if approved.
Colorado offers up to an amazing $6,000 for plug-in electric drive vehicles and even offers credits on non-electric hybrids.
A state of Georgia income tax credit is available for 20% of the cost to purchase or lease a new ZEV (zero emission vehicle), up to $5,000 per vehicle.
The Illinois Alternate Fuels Rebate Program provides a rebate for 80% of the incremental cost of purchasing an AFV including an EV, up to $4,000, or 80% of the cost of converting a conventional vehicle or a hybrid electric vehicle.
Louisiana offers an income tax credit worth 50% of the cost premium of an electric car, plug-in hybrid, or converting a vehicle. A taxpayer may instead take a tax credit worth 10% of the cost of the motor vehicle or up to $3,000, whichever is less. Similar credits are available for charging equipment installation. (Reference House Bill 110, 2009, and Louisiana Revised Statutes 47:6035)
All-electric (EVs) and plug-in hybrid electric vehicles (PHEVs) are eligible for a tax credit of up to $1,000 against the imposed excise tax. The tax credit is limited to one vehicle per individual and 10 vehicles per business entity. The vehicle must be purchased between October 1, 2010, and July 1, 2013. Check out the Maryland DOT site for more.
A tax credit of up to $500 is available for electric car conversions. Yeah, that probably won’t make much of a dent.
Zero-emission vehicles sold, rented, or leased in New Jersey are exempt from state sales and use tax. This exemption is not applicable to partial zero emission vehicles, including hybrid electric vehicles. The New Jersey DOT has more info.
For tax years beginning before January 1, 2015, a one-time income tax credit is available for 50% of the incremental cost of purchasing a new original equipment manufacturer AFV or converting a vehicle to operate on an alternative fuel. The state also provides a tax credit for 10% of the total vehicle cost, up to $1,500, if the incremental cost of a new AFV cannot be determined or when an AFV is resold, as long as a tax credit has not been previously taken on the vehicle. Equipment used for conversions must be new and must not have been previously used to modify or retrofit any vehicle. The alternative fuels eligible for the credit are compressed natural gas, liquefied natural gas, liquefied petroleum gas, hydrogen fuel cell, and electricity. Hydrogen fuel cell vehicles are eligible through December 31, 2010, and only qualified electric vehicles placed into service before July 1, 2010, are eligible. For vehicles propelled by electricity only, the credit is based on the full purchase price of the vehicle. For vehicles equipped with an internal combustion engine and powered partially by electricity, such as a hybrid electric vehicle, the credit is based on the cost of the portion of the motor vehicle attributable to the propulsion of the vehicle by electricity.
South Carolina residents that claim the federal fuel cell, advanced lean burn, hybrid electric vehicle, or alternative fuel vehicle tax credit are eligible for a state income tax credit.
Utah provides an income tax credit of 35% of the vehicle purchase price or $2,500, whichever is less, for an original equipment manufactured compressed natural gas vehicle registered in Utah. Other new clean fuel vehicles that meet air quality and fuel economy standards may be eligible for a credit of up to $750. The state also provides a credit of 50% of the cost of converting a vehicle to operate using a clean fuel (including propane, natural gas, or electricity), up to a maximum of $2,500 per vehicle.
New passenger cars, light-duty trucks, and medium-duty passenger vehicles that are dedicated AFVs are exempt from the state motor vehicle sales and use taxes. Qualified vehicles must operate exclusively on natural gas, propane, hydrogen, or electricity.
West Virginia (surprisingly) just enacted some of the best AFV incentives in the country. Effective July 1, 2011, an income tax credit is available to eligible taxpayers who convert a vehicle to operate exclusively on an alternative fuel or purchase a new original equipment manufacturer dedicated or bi-fuel AFV. The value of the tax credit is 35% of the vehicle purchase price or 50% of the vehicle conversion cost, up to $7,500 for vehicles with a gross vehicle weight rating (GVWR) up to 26,000 pounds (lbs.) and up to $25,000 for vehicles with a GVWR greater than or equal to 26,000 lbs. For the purpose of this tax credit, a qualified AFV operates on fuel including natural gas, propane, electricity, hydrogen, and coal-derived liquid fuels. Plug-in hybrid electric vehicles are also eligible.
Let me know if I missed anything!
Electric Vehicle Tax Credit Discussion:
If you live in one of these states are these incentives, matched with the federal credit enough to make you consider an electric vehicle purchase?