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, 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.
California
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 limits to pay attention to, however.
Colorado
Colorado’s electric vehicle tax credits have been extended through 2021 and total $5,000.
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 under $60,000.
Delaware
The state of Delaware is offering electric vehicle rebates totaling up to $3,500 depending on vehicle type. New battery electric vehicles are eligible for a $3,500 rebate and plug-in hybrids are eligible for a $1,500 rebate.
Louisiana
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 percent 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
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.
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.
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.
New York
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.
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 $1,750 will be offered for PHEVs and EVs (battery system capacity equal/greater than 10 kWh) until 500 rebates are disbursed or December 31, 2017, whichever occurs first.
South Carolina
For years between 2012 and 2017, 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.
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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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.