In my most fuel efficient cars and cheapest electric cars articles, I highlighted the Mini Cooper Electric Hardtop as one of the top eMPG vehicles in the U.S. market and it comes in well below $30K. But a key component of that cost is the U.S. federal tax credit of $7,500 knocking the net price down from around a $30,000 MSRP to the low $20K range. 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, non-plugin hybrid tax credits no longer exist at the federal level.
Electric vehicles are eligible for up to 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 automaker’s electric vehicles produced in the U.S. market (then phase-out occurs).
On that last point, GM and Tesla’s electric vehicle tax credits have already been phased out entirely, as of the start of 2020, with GM vehicles purchased after 3/31/20 and Tesla vehicles purchased after the end of 2019 no longer eligible for partial credits.
You can see a full list of requirements and eligible vehicles at the Fueleconomy.gov electric vehicle tax credit site.
Additionally, don’t forget about federal energy tax credits. There are significant solar tax credits available through 2023.
State Electric Vehicle Tax Credits
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 for 2021 and 2022, but you will need to do some further digging and check with your state to make sure these incentives still apply, as they change frequently, and often depend on state funding per year. If your state is not listed, my research came up empty. If I missed something in your state, let me know and I’ll add it.
California
Rebates were available through the Clean Vehicle Rebate Project (CVRP) for the purchase or lease of qualified vehicles, which include eligible zero-emission plug-in hybrid, battery EV, and fuel cell light-duty vehicles. They’ve also increased the standard rebate for households that are below federal poverty guideline levels. Below is a summary, but check out their full guidelines for more details.
| Type of Vehicle | Standard Rebate | Increased Rebate | Total Rebate |
|---|---|---|---|
| Plug-in Hybrid EV | $1,000 | $2,500 | $3,500 |
| Battery EV | $2,000 | $2,500 | $4,500 |
| Fuel Cell EV | $4,500 | $2,500 | $7,000 |
Colorado
Colorado’s electric vehicle tax credits have been extended with a phaseout in place for purchases of electric vehicles in the following years:
2021-2022:
- light duty passenger vehicle: $2,500
- light duty electric truck: $3,500
- medium duty electric truck: $5,000
- heavy duty electric truck: $10,000
2023-2025:
- light duty passenger vehicle: $2,000
- light duty electric truck: $2,800
- medium duty electric truck: $4,000
- heavy duty electric truck: $8,000
Lease credits are less. More info can be found here.
Connecticut
The Connecticut Hydrogen and Electric Automobile Purchase Rebate (CHEAPR) offers rebates for Connecticut residents who purchase or lease a new eligible electric, fuel cell electric, or plug-in hybrid electric vehicle. They also recently added increased credit amounts (called “Rebates+”) for those who meet lower income criteria. See the full FAQ for more details. The following amounts are for June 2, 2021 – December 31, 2022, or until program funds are fully exhausted.
| Standard Rebate | Rebate+ | Total Rebate | |
| Plug-In Hybrid Electric Vehicle (PHEV) | $750 | $1,500 | $2,250 |
| Battery Electric Vehicle (BEV) | $2,250 | $2,000 | $4,250 |
| Fuel Cell Electric Vehicle (FCEV) | $7,500 | $2,000 | $9,500 |
Delaware
The state of Delaware is offering electric vehicle cash rebates totaling up to $2,500 depending on vehicle type. The program was extended through 2021 and applies to vehicles purchased or leased before June 30, 2022. The rebate must be applied for within 90 days of the purchase date. Purchase price cannot exceed $60,000.
Rebates are as follows:
| Vehicle Type | Rebate |
|---|---|
| New Battery Electric Vehicles (including vehicles with gasoline range extenders) | $2,500 |
| New Plug-in Hybrid Electric Vehicles* | $1,000 |
| New Dedicated Propane or Natural Gas Vehicles | $1,500 |
| New Bi-Fuel Propane or Natural Gas Vehicles | $1,350 |
Maine
Maine offers electric vehicle tax rebates that vary based on your income level and whether the vehicle is all-electric, plug-in, and new or used.
The standard rebate is:
- 100% battery: $2,000
- plug-in hybrid: $1,000
For qualified low-income:
- new 100% battery: $5,500
- new plug-in hybrid: $4,000
- used 100% battery: $2,500
- used plug-in hybrid: $2,500
Must be purchased or leased on or after August 29, 2019, and prior to the date of the Program’s termination, as noticed to Participating Dealers and on the Efficiency Maine website, or June 30, 2022, whichever comes first.
Massachusetts
The Massachusetts Department of Energy Resources has a program called Massachusetts Offers Rebates for Electric Vehicles (MOR-EV), which offers incentives of up to $2,500 for the purchase or lease of new electric vehicles, including battery and fuel-cell electric vehicles and up to $1,500 for plug-in hybrid electric vehicles. Purchase price must be $50,000 or less.
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. 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.
New York
New York offers tax rebates for new electric vehicles, as follows:
- Range: > 200 miles: $2,000
- Range: 40 to 199 miles: $1,000
- Range: <40 miles: $500
- Electric vehicles > $42,000 MSRP: $500
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. The state will allow an income tax credit of 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 an income tax credit has not been previously taken on the vehicle.
Oregon
As of late 2019, Oregon’s electric vehicle rebates are:
Standard Rebate:
- $2,500 towards the purchase or lease of a new plug-in hybrid electric vehicle or battery electric vehicle with a battery capacity of 10 kWh or more.
- $1,500 towards the purchase or lease of a new plug-in hybrid electric vehicle or battery electric vehicle with a battery capacity of less than 10 kWh.
- $750 towards the purchase or lease of a zero-emission electric motorcycle.
Additionally, starting in 2022 is an increased income-based “Charge Ahead” rebate:
Charge Ahead Rebate for the purchase or lease of a new or used battery electric or plug-in hybrid electric vehicle. To qualify for the Charge Ahead rebate, the purchaser or lessee must be from a low- or moderate-income household. For purchases or leases prior to Jan 1, 2021, the income requirements vary by where you live in Oregon and are based on household size. For purchases on or after Jan 1, 2021, the income requirement is up to 400% of the federal poverty guideline.
For the Charge Ahead rebate option:
- On or after Jan. 1, 2022: $5,000 towards the purchase or lease of a new or used battery electric or plug-in hybrid electric vehicle.
- Prior to Jan. 1, 2022: $2,500 towards the purchase or lease of a new or used battery electric or plug-in hybrid electric vehicle. Standard and Charge Ahead Rebates can be combined for up to $7,500 toward the purchase or lease of a new, eligible vehicle.
Pennsylvania
Pennsylvania now offers the following rebates:
New vehicles with final purchase price of $50,000 or less (purchase or lease):
$1,000 rebate on:
- Hydrogen fuel cell vehicle
$750 rebate on:
- Battery electric vehicle
$500 rebate on:
- Plug-in hybrid electric vehicle
- Compressed natural gas vehicle
- Propane fueled vehicle
- Electric motorcycle (Does not include electric scooters
An additional $1,000 is available to applicants who meet low-income requirements. For details, see Alternative Fuel Vehicle Rebate Guidelines.
Texas:
New, starting in late 2021, Texas is offering a $2,500 rebate for EVs purchased through 2022. Only vehicles purchased on or after September 1, 2021 from a dealer licensed to sell or lease vehicles in Texas are eligible. Review the notice of rebates and the for additional eligibility criteria.
Vermont:
Vermont relaunched its electric vehicle credits Nov. 5, 2020. Credits are 25% of the purchase price, up to $5,000 for income-eligible Vermonters purchasing or leasing a new electric vehicle, so long as funding remains.
Let me know if I missed anything!
Electric Vehicle State 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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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!
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.
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!
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…
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).
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.
And what will be the resale value unless you can find someone naïve enough to buy it and spend 3K on replacement batteries?!
True Mark but I found a place near me that installed a “rebuilt” 10′ Prius battery for under $1300 “out the door”. I got almost 190k before mine failed (started having issues though before that for a few months). Some vehicles such as the 17′ and 18′ Pacifica have a 10 year 100k or 10 yr 150k war depending on state as well. Amanda, nothing wrong about being a “sucker for Earth”. too bad Fl doesn’t have any state credit! I also was told, trying to find out on, the $7500 credit. Depends on income, you don’t auto get the full $7500? So far can’t find any info on this.
A tax credit of up to $500 is available for electric car conversions. Yeah, that probably won’t make much of a dent.
gazeteler, are you referring to adding a 240v charging station in a home?
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?
I live in MN and am wondering if I can take the $7,500 tax credit even if next year I choose the standard deduction. In other words, do I need to itemize in order to take advantage of the credit?
Bought an all electric car in 2017, got my Colorado credit, in the form of a check, now I have to pay tax on the $6k I got? So I paid income tax, sales tax on the car and now I have to pay tax on the car again? Pretty messed up.
I’m not sure about the specifics on the credit in Colorado – but getting an additional $6K credit is phenomenal. Glass half full!
Sure, it didn’t suck getting the 6K, but since i bought it used, I did not qualify for the Federal credit. I have reserved a Model 3, when I get it Colorado credit is down to $5k. Still doesn’t suck, but it chaps my hide to be taxed 3 times on a vehicle.
Is there an income limit for the $7500 federal rebate for the hybrid plug-in car? For California, the income limit is $150,000 for single filers, $204,000 for head-of-household filers, and $300,000 for joint filers.
Louisiana: “In cases of a new motor vehicle purchased by a taxpayer” Unlike some states, only new vehicles can claim the credit.
I own 2018 Prius 3 purchased 1/2018 sport city toy. Dallas tx. Purchased new. Any tax credit incentives for Texas on my car??
Thx
Hi,
If I buy a new 2018 model year Prius Prime from a dealer now, in 2019, do I still qualify for the federal tax credit and California state rebate?
Thanks for the great info– Mark
Does Washington State have a tax credit, and is the Pacifica Hybrid eligible for the 7500 Hybrid Tax Credit?
Jeremy, Tax credits are taken directly off the taxes you owe. They are not deductions which must be tabulated on the Itemized Deduction Schedule. The tax credit will apply even if you take the standard deduction.
I am curious about the federal tax credit. I thought the 200,000 unit limit was for all hyrbid/electric vehicles combined in the country, Your article states it is model-based. So if I am interested in getting a Subaru Crosstrek Plug-in Hybrid that was just introduced this year, chances are pretty good they are nowhere near that 200,000 unit limit and I can qualify for the $7,500 credit? Or did I read that wrong?
Not model based – it is manufacturer based.
I would also like to know about the pacifica hybrid tax credit availability in Washington State
Kiros
In the state of Georgia I believe that alternative fuel conversions which includes conversion to 100% battery powered electric is eligible for up to $2500 as a tax credit (https://epd.georgia.gov/air/documents/conversion-vehicle-tax-credit-certificate-form). The conversion kit must have an EPA certificate of conformity; whatever that is.
I’m confused about Oklahoma’s AFV incentives. I’m not sure if it would include full-electrics / BEVs. So far all I’m seeing is eligibility for CNG and other alternative gas type fuels. Is there any clarification on this?