In my most fuel efficient cars post, I highlighted the Hyundai Ioniq 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 .
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, Tesla’s electric vehicle tax credits have already been phased out entirely, as of the start of 2020. GM will see their credits phased down to from $1,875 at the start of 2020 to $0 at the start of April.
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 signficant solar tax credits available until 2022.
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 2020, 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.
Rebates were available through the Clean Vehicle Rebate Project (CVRP) for the purchase or lease of qualified vehicles up to $2,000 in electric vehicle rebates for the purchase or lease of new, eligible zero-emission and plug-in hybrid light-duty vehicles. However, it appears those credits expired at the beginning of 2020.
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 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 $42,000 for PHEV/BEV models or $60,000 for FCEV models.
Amounts (which recently changed) are now as follows:
- Plug-in hybrid: $500 rebate.
- Battery electric: $1,500 rebate for 200 miles or greater range, $500 rebate for less than 200 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 offered an income tax credit for 10% of the cost of the motor vehicle, up to $2,500 (whichever is less) for alternative fuel vehicles registered in the state. However, unless these credits are extended, they expired at the beginning of 2020.
Maryland had provided a tax credit equal to $100 times the number of kilowatt-hours of battery capacity of the vehicle, up to $3,000. However, these funds were depleted and have not yet been renewed.
The Massachusetts Department of Energy Resources has a program called Massachusetts Offers Rebates for Electric Vehicles (MOR-EV), which offered up to $1,500 for the purchase or lease of new electric vehicles. However, it looks like these have expired for the time being:
The Department of Energy Resources’ Massachusetts Offers Rebates for Electric Vehicles (MOR-EV) program expired on September 30th, 2019. Eligible electric vehicle purchases made through September 30th, 2019 may still apply within 3 months of the vehicle purchase date. The last day the program will accept any eligible rebate applications will be December 30th, 2019 for eligible vehicles purchased on or before September 30th, 2019.
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 now offers tax rebates for new electric vehicles, as follows:
- Range: > 120 miles: $2,000
- Range: 40 to 119 miles: $1,700
- Range: 20 to 39 miles: $1,100
- Range: < 20 miles: $500
- Electric vehicles > $60,000 MSRP: $500
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.
As of late 2019, Oregon’s electric vehicle rebates are now:
- $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.
For the Charge Ahead Rebate:
- $2,500 towards the purchase or lease of a new or used battery electric vehicle.
- Plug-in hybrid electric vehicles purchased on Sept. 29, 2019 or later are also eligible for the Charge Ahead Rebate.
Pennsylvania now offers the following rebates:
New vehicles with final purchase price of $50,000 or less (purchase or lease):
$1,500 rebate on:
- Battery electric vehicle
- Hydrogen fuel cell vehicle
$1,000 rebate on:
- Plug-in hybrid electric vehicle
- Electric motorcycle
- Compressed natural gas vehicle
- Propane fueled vehicle
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?