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 $29,010 to $21,510.
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. up to $5,000 in electric vehicle rebates for the purchase or lease of new, eligible zero-emission and plug-in hybrid light-duty vehicles.
Colorado’s electric vehicle tax credits have been extended through 2012. The have an interesting formula to determine the credits:
(Purchase price or sum of lease payments) X (battery capacity in kWh) = State credit amount
Nissan Leaf Example: $21,300 (base price of Leaf after $7,500 federal credit) X 24kWh = $5,112 Credit
A state of Georgia electric vehicle tax credit is available for:
- Low-Emission Vehicle (LEV) – 10% of the vehicle cost or $2,500 (whichever is less)
- Zero Emission Vehicle (ZEV) – 20% of the vehicle cost or $5,000 (whichever is less)
A list of eligible vehicles is available on their site.
The Illinois Alternate Fuels Rebate Program provides a rebate of:
- For a new alternate fuel vehicle that has a conventional gasoline or diesel make and model counterpart, the amount of the rebate is 80 percent of the incremental cost of the alternate fuel vehicle versus its conventional counterpart (same make, model, and model year) up to $4,000.
- For a new alternate fuel vehicle that does not have a conventional make and model counterpart, but does have an increased cost due to the alternate fuel engine/motor and fuel system versus a comparable conventional engine/motor, the amount of the rebate is 10 percent of the base retail price of the vehicle as reflected on the MSRP (“base MSRP”), not including add-on equipment options, up to $4,000. At the current time, the only vehicles in which the 10 percent of the base MSRP is used to establish the rebate amount are electric vehicles.
Louisiana offers an income tax credit for 50 percent of the cost of converting or purchasing an alternative fuel vehicle or constructing an alternative fueling station. Alternatively, a tax credit of 10 percent of the cost of the motor vehicle, up to $3,000 is available for alternative fuel vehicles registered in the state.
Effective July 1, 2013 through June 30, 2014, a tax credit of up to $1,000 is available against the excise tax imposed for the purchase of a qualified plug-in electric vehicles. Effective July 1, 2014, H.B. 1345 and S.B. 908 (2014) replace the existing tax credit by providing a tax credit equal to $125 times the number of kilowatt-hours of battery capacity of the vehicle, or up to $,3000.. Check out the Maryland DOT plug-in tax credit application for more info.
The Massachusetts Department of Energy Resources has a program called Massachusetts Offers Rebates for Electric Vehicles (MOR-EV), which offers rebates of up to $2,500 to customers purchasing PEVs. The program will launch in the summer of 2014.
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 definition of “sale” in the law includes rentals and leases. Thus, the exemption is applicable to the sale, rental or lease of a new or used zero emission motor vehicle on and after May 1, 2004.
The New Jersey DOT has more info.
For tax years beginning before January 1, 2020, Oklahoma provides a one-time income tax credit of 50% of the cost of converting a motor vehicle to operate on certain alternative fuels, or for 50% of the incremental cost of purchasing a new Original Equipment Manufacturer (OEM) AFV.
Residents who claim the federal fuel cell vehicle tax credit are eligible for a state income tax credit equal to 20 percent of the federal credit.
Qualified vehicles purchased or leased may be eligible for a rebate of up to $2,500. The Light-Duty Motor Vehicle Purchase or Lease Incentive (LDPLI) Program is available until June 26, 2015 or until total funding of $7.75 million is awarded. Only purchases made on or after May 13, 2014 are eligible to apply for the rebate.
For vehicles purchased from 1/1/2014 – 12/31/2014: The state provides an income tax credit of 35% of the vehicle purchase price, up to $2,500, for an original equipment manufacturer compressed natural gas vehicle registered in Utah. This credit is for the taxable year in which the vehicle was purchased.
For vehicles purchased after 1/1/2015: the state provides an income tax credit of $1,000 for the original purchase of new qualifying Plug-in hybrid vehicles registered in Utah. The state provides an income tax credit of 35% of the vehicle purchase price, up to $1,500, for an original equipment manufacturer natural gas, propane, or qualifying electric vehicle registered in Utah.
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) enacted some of the best AFV incentives in the country.
- 35 percent against purchase price to a maximum of $7,500
- 50 percent against conversion costs to a maximum of $7,500
- 35 percent against purchase price to a maximum of $25,000
- 50 percent against conversion costs to a maximum of $25,000
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?