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Home » Auto Ownership, Eco-Friendly Savings

Electric & Hybrid Tax Credits by State

Last updated by on June 19, 2016

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 Tax CreditElectric 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:

  1. It must be purchased in or after 2010.
  2. You must be the original owner.
  3. 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.

California

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. There are income limits to pay attention to, however.

Colorado

Colorado’s electric vehicle tax credits have been extended through 2021. The have an interesting formula to determine the credits:

(Purchase price or sum of lease payments) x (battery capacity in kWh) / 100 = State credit amount

Nissan Leaf Example: $21,300 (base price of Leaf after $7,500 federal credit) x 24kWh / 100 = $5,112 Credit

Connecticut

The Connecticut Hydrogen and Electric Automobile Purchase Rebate (CHEAPR) offers rebates of up to $3,000 for Connecticut residents who purchase or lease a new eligible battery electric, fuel cell electric, or plug-in hybrid electric vehicle.

Louisiana

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 (whichever is less) is available for alternative fuel vehicles registered in the state.

Maryland

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 $3,000. Check out the Maryland DOT plug-in tax credit page for more info.

Massachusetts

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 has launched.

New Jersey

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.

Oklahoma

For tax years beginning before January 1, 2020, Oklahoma provides a one-time income tax credit of 45% of the cost of converting a motor vehicle to operate on certain alternative fuels, or for 45% of the incremental cost of purchasing a new Original Equipment Manufacturer (OEM) AFV.

Pennsylvania

Rebates of $2,000 will be offered for PHEVs and EVs (battery system capacity equal/greater than 10 kWh) until 250 rebates are disbursed or June 30th, 2016, whichever occurs first.

South Carolina

The credit is equal to $667, plus $111 if the vehicle has at least five kWh of battery capacity, plus an additional $111 for each additional kWh, with a maximum allowed credit of $2,000. Here are more details.

Utah

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.

Washington

New passenger cars, light-duty trucks, and medium-duty passenger vehicles purchased before 7/1/2019 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.

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?

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I am G.E. Miller, & this is my story. My goal is financial independence ASAP. If you share that goal, join me & 10,000+ others by getting FREE email updates. You can also explore every post I have written, in order.


9 Comments »
  • Rita says:

    Extremely useful. I knew about the federal credit, but had no idea that my podunk state of West Virginia had one of the best incentives in the country. It might actually make sense for me to buy a Leaf (if I can find one!). Thanks!

  • Ron Ablang says:

    Hmmm. This is still quite a premium over your gas operated cars. One might have to drive a certain number of miles per year more just to break even w/ having a new gasoline-run car.

    • G.E. Miller says:

      Here’s an example where it may pay off:
      You live in West Virginia and buy a Nissan Leaf.
      MSRP of $32,780 – let’s say you negotiate that down to $3,200
      With the W.V. tax credit of 35%, you’d get $7,500 back plus an additional $7,500 federal.
      That would bring your purchase cost down to $17,000 – and there aren’t many vehicles you can get at that price. For comparisons sake, let’s compare to a fuel efficient, low-cost Honda Civic. Civic’s get 39 mpg hwy and the automatic version retails for $16,405.
      If you were to drive your vehicles 12,000 miles per year, you’d be saving $1,500 annually in fuel. On top of that, electrics have much less maintenance costs (brakes can last 100K miles, no oil changes, no exhaust system, etc.). Let’s say $500/year savings there. At the end of the first year, you’d have saved $1K over buying a civic and $2K every year after that (assuming gasoline prices don’t increase – and we all know they probably will). Over the lifetime of the vehicle, you could be saving $15K or more!

      • Amanda says:

        I am currently in WV, and it would be nice to get this kind of car, but the cost of installing a plug for them (and the cost of the electrician with that) is pretty outragious. Basically, you’re paying for the gas you’re not using for 3 years before the first day. Also, the range on them is about 100 miles. Charging stations are not readily available anywhere currently, so you cannot do trips in these cars (other brands have a standard plug option that takes 17 hours to charge and a “dryer plug” option that takes 9 hours, but the Nissan Leaf has to have the special charging station). I drive about 100 miles a week when I’m in town, so I would only drive about 4,500 miles a year with this car. I would still need to keep my other car for road trips, or get a rental (I usually take about 3 weeks worth of road trips a year), so insurance/rentals would put a pretty big dent in the possible savings.

        I’m still considering it, though; I’m a sucker for this planet…

        • G.E. Miller says:

          I’ve read it would cost about $2,000 for the install unit. So that would be a little more than a year to pay it off vs. 3 (mileage may vary).

          • Amanda says:

            It would be about 15,000 miles for $3.50 gas and my current car. When you take into consideration my personal commute and the lack of ability to drive long distances, that’s three years of gas.

      • Mark B. says:

        And what will be the resale value unless you can find someone naïve enough to buy it and spend 3K on replacement batteries?!

  • gazeteler says:

    A tax credit of up to $500 is available for electric car conversions. Yeah, that probably won’t make much of a dent.

  • Andrea says:

    Would a Prius II (non plug-in) qualify for the credit in West Virginia? I cannot find a list of vehicles that qualify. Does anyone know where I can find one?

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