In my most fuel efficient cars post, I highlighted the Hyundai Ioniq as the top mpg (equivalent) vehicle in the U.S. market and it comes in well below $30K. But a key component of that is the U.S. federal tax credit of $7,500 knocking the net price down from a $30,000 MSRP to $22,500.
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 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).
On that last point, Tesla’s electric vehicle tax credits have already been phased down to $3,750 for Jan – June of 2019, and will drop to $1,875 for the rest of 2019 (and $0 thereafter). GM will see their credits phased down to $3,750 in April – September of 2019, and then $1,875 from October through March of 2020 (and $0 thereafter).
You can see a full list of requirements and eligible vehicles at the Fueleconomy.gov electric vehicle tax credit site.
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, as they change frequently, depending on state funding. 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 $2,500 in electric vehicle rebates for the purchase or lease of new, eligible zero-emission and plug-in hybrid light-duty vehicles. There are income eligibility limits to pay attention to, however.
Colorado’s electric vehicle tax credits have been extended with a phaseout in place:
- 2019: $5,000 for purchase, $2,500 for lease
- 2020: $4,000 for purchase, $2,000 for lease
- 2021: $2,500 for purchase, $1,250 for lease
More info here.
The Connecticut Hydrogen and Electric Automobile Purchase Rebate (CHEAPR) offers rebates of up to $5,000 for Connecticut residents who purchase or lease a new eligible electric, fuel cell electric, or plug-in hybrid electric vehicle. An eligible vehicle’s MSRP must not exceed $50,000 for PHEV/BEV models or $60,000 for FCEV models.
Amounts are as follows:
- Plug-in hybrid: $1,000 rebate for 45 miles or greater range, $500 rebate for less than 45 miles range.
- Battery electric: $2,000 rebate for 200 miles or greater range, $1,500 rebate for 120-199 miles range, $500 rebate for less than 120 miles range.
- Fuel cell electric: $5,000.
The state of Delaware is offering electric vehicle rebates totaling up to $3,500 depending on vehicle type.
|Type of Vehicle/Vehicle Technology||Rebate|
|New Battery Electric Vehicles||$3,500|
|New Plug-in Hybrid Electric Vehicles (including vehicles with gasoline range extenders)||$1,500|
|Retrofitted Battery Electric and Plug-in Hybrid Electric Vehicles||$1,500|
|New Battery Electric or Plug-in Hybrid Electric Vehicles with base MSRP >$60,000||$1,000|
|New Dedicated Propane or Natural Gas Vehicles||$1,500|
|New Bi-Fuel Propane or Natural Gas Vehicles||$1,350|
Louisiana offers an income tax credit for 30% of the cost of converting or purchasing an alternative fuel vehicle or constructing an alternative fueling station. Alternatively, a tax credit of 10% of the cost of the motor vehicle, up to $2,500 (whichever is less) is available for alternative fuel vehicles registered in the state.
Maryland provides a tax credit equal to $100 times the number of kilowatt-hours of battery capacity of the vehicle, up to $3,000. Check out the Maryland DOT plug-in tax credit page for more info.
1/1/2019 update: “Please be advised, effective immediately the $3 million funding authorized by the legislation for the Plug-In Electric Vehicle Excise Tax Credit for fiscal year 2019 are depleted. We are currently processing applications that have already been received that will utilize the remaining funding. Applications will be processed in the order they were received. Once all funds are exhausted, no additional refunds will be issued until July 1, 2019 (fiscal year 2020) when additional funds become available.”
The Massachusetts Department of Energy Resources has a program called Massachusetts Offers Rebates for Electric Vehicles (MOR-EV), which offers up to $1,500 for the purchase or lease of new electric vehicles, including battery electric, fuel cell electric vehicles and $450 for zero-emission motorcycles. Purchase price may not exceed $50,000.
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.
Launched in 2017, New York now offers $500 rebate for new vehicles over $60,000, and a $2,000 rebate for new vehicles under $60,000.
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.
Starting 12/12/18, Oregon is offering electric vehicle rebates of:
- $2,500 towards the purchase or lease of a new plug in hybrid or battery EV with a battery capacity of 10 kWh or more.
- $1,500 towards the purchase or lease of a new plug in hybrid or battery EV with a battery capacity of less than 10 kWh.
Charge Ahead Rebate:
- $2,500 towards the purchase or lease of a new or used battery electric vehicle only
- If purchasing or leasing a new battery electric vehicle and qualifications are met for both programs, eligible purchases can combine the Charge Ahead Rebate with a Standard Rebate for a total rebate of up to $5,000.
The following rebates will be offered beginning August 31, 2018. The program offered will be reassessed on June 30, 2019.:
- A $2,000 rebate for BEV and PHEVs with a battery capacity greater than or equal to 85kWh.
- A $2,000 rebate for Hydrogen Fuel Cell Vehicles
- The eligible vehicle final purchase price cap is increased from $50,000 to $60,000 for Hydrogen Fuel Cell Vehicles and BEVs and PHEVs with a battery capacity equal to or greater than 60 kWh.
- A $1750 rebate is available for BEV and PHEVs with a battery capacity less than 85 kWh and equal to or greater than 30kWh.
- A $1000 rebate is available for BEV and PHEVs with a battery capacity greater than or equal to 10kWh and less than 30kWh.
- A $750 rebate for BEV and PHEV’s with a battery capacity less than 10kWh.
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?