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 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 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.
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 eligibility limits to pay attention to, however.
Colorado
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.
Connecticut
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.
Delaware
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
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
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.”
Massachusetts
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.
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
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. 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
Starting 12/12/18, Oregon is offering electric vehicle rebates of:
Standard Rebate:
- $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.
Pennsylvania
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?
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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.