These Are The Electric Cars And Plug
The 2022 Wrangler Rubicon 4xe is a plug-in off-road hybrid that can run for the first 22 miles … solely on battery power.
With gas prices flirting with, and in a few areas exceeding the $4.00 per gallon threshold, buying or leasing a full electric or a plug-in hybrid car or SUV is a cost-effective way to save money at the pump, compared to driving a conventionally powered model.
The EPA says EVs can cost as little as $450-$500 a year to keep replenished with kilowatts, based upon 15,000 miles of combined city and highway driving and home charging at national average electric rates. Thats as much as $7,000 less than the average new vehicle owner will pay over five years to keep a gas tank filled. Ownership costs are even lower when you consider the fact that an electric car requires minimal maintenance and repair costs in that a battery powertrain has far fewer moving parts than a gas engine and automatic transmission, and doesnt require fluid or belt changes and tune ups.
PHEVs come with a larger battery pack than a standard hybrid that allows them to run for a set number of miles solely on electricity. With most affording between around 25 and 60 miles on a full charge, some PHEV owners rarely use much gas at all.
How About Fuel Cell Cars
Hydrogen fuel cell electric vehicles do qualify for incentives in some states. Take a look at the U.S. Department of Energy website to see the latest hydrogen laws and incentives in your state.
Is the electric vehicle tax credit still available? Yes, the electric vehicle tax credit is available for some but not all automakers. According to the EPA, the credit begins to phase out for vehicles the second quarter after the manufacturer has sold 200,000 eligible plug-in electric vehicles. The tax credits for General Motors and Tesla, for example, have been completely phased out and EVs made by them no longer qualify for the federal tax credit.
How does an electric vehicle tax credit work?The federal incentive is only worth $7,500 to someone whose tax bill at the end of the year is $7,500 or more. Let’s say you buy a Hyundai Kona EV or other eligible vehicle and you owe $5,000 in income tax for that year. That’s all the tax credit will be. The IRS will not issue you a refund check for the other $2,500. And an unused portion of the credit can’t be applied against the following year’s taxes. If you are leasing, the tax credit will go to the finance company, not you. The carmaker will likely factor the credit into the cost of the lease to lower your monthly payment, but it isn’t mandatory.
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State And Local Incentives Where You Live
Though the federal governments effort makes up the lions share of government EV discounts, some states and local governments have incentive programs to help new car buyers afford something more efficient. These can be tax credits, rebates, reduced vehicle taxes, single-occupant carpool-lane access stickers, and exemptions from registration or inspection fees.
California offers the most support for EV buyers. Residents can qualify for up to $7,000 in state incentives through the states Clean Vehicle Rebate Project.
Alaska, Alabama, and West Virginia are among states offering no support to individual EV buyers. However, they do offer some programs to offset the cost of businesses pursuing more fuel-efficient fleets.
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Tax Incentives On Electric Vehicles Are Worth The Research
Hopefully this post has helped to incentivize you to use the resources above to your advantage.
Whether its calculating potential savings or rebates before making a new EV purchase or determining what tax credits might already be available to you for your current electric vehicle, there is much to discover.
Ditching fossil fuels for greener roadways should already feel rewarding, but right now the government is willing to reward you further for your environmental efforts.
Use it to your full capability while you can, because as more and more people start going electric, the less the government will need to reward drivers.
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Other Federal Tax Credit Rules To Note As An Electric Vehicle Owner
Hopefully you better understand how the government determines its tax credits for individuals based on your federal income tax and vehicle, but its important to stay aware of additional fine print. This is the US government, after all.
First, understand that these federal tax credits will not last forever, and they may have already expired for your vehicle. As the demand for electric vehicles increases, sales push certain manufacturers over the predetermined threshold of qualified sales at least for now.
This includes US automakers like Tesla, who topped over 200,000 qualified plug-in electrics sold a few years ago, and as a result no longer qualifies for any federal tax credit. Fear not, Tesla owners, there are still ways to save money on your EV purchase! See the tax incentives for Tesla buyers section below.
Other automakers like General Motors have also reached that threshold and could benefit from revised legislation to reinstate the credit.. more on that later. Most recently, Toyota announced its on the verge of passing 200,000 EVs sold therefore losing eligibility for federal tax credits.
At this rate, the Japanese automaker expects to hit 200k in late June of 2022. If that is the case, credits for Toyota EVs will be phased out gradually into 2023, so you may still qualify for a credit, but it will be dwindling on borrowed time.
Can a household receive multiple Federal tax credits?
Again, speak with a tax professional or the IRS to be certain this is possible.
Your Electric Utility May Help
Lastly, its not just governments that can help you with the cost of a new EV. Some local electric utilities have incentive programs to help buyers get into electric vehicles .
These can be as significant as a rebate. The Omaha Public Power District, for instance, offers a $2,500 rebate to customers who purchase a new EV and home charging station. Or they may be as small as discounted electric rates for charging an EV outside peak hours.
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Should I Act Now Or Wait
The current federal program is generous and there are many affordable EVs coming to the market from manufacturers who have large banks of these credits to give. If youre looking to make the transition to an EV or a plug-in hybrid, you may want to act sooner than later.
However, if you have your heart set on a Tesla or perhaps GMs new Hummer EV or Cadillac Lyriq, both of which launch next year, it wouldnt hurt to wait and see if the EV tax breaks come up again in Congress.
Part of the proposal that was put on ice would increase the manufacturers sunset total to 600,000 vehicles enough to bring GM and Tesla vehicles back into qualifying territory. That same proposal would create a $2,500 incentive for used EV purchases.
Another part of the proposal would apply the full credit at the point of sale. This change would mean that buyers could take it as a discount on the cars price rather than waiting until the next tax season to claim it as a deduction.
While as a percentage, EV sales growth is exponential, these vehicles represent about four percent of overall sales. If manufacturers build more EVs than the market wants, two things will happen. Prices will come down and there will be increased pressure for more federal subsidies in order to boost electric car sales. In either scenario, you win.
Electric Cars Guides:
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Incentives By Electric Vehicle Model
The federal electric vehicle tax credit is based on the vehicles battery pack, not the price. The credit amount will begin to drop and eventually completely phase out when the manufacturer sells 200,000 units of a particular model.
The federal tax credit only reduces your tax liability. For example, even if a vehicle qualifies for the full $7,500 and you owe $5,000 in taxes, it will only credit the $5,000. You will not receive the rest of the credit of $2,500.
In the table below, we summarize the 2020 and 2021 EV models with available rebates when purchasing.
Are There Tax Credits From States Or Other Sources
Yes. While the federal tax credits for plug-in and natural gas vehicles get the most mention, there also are dozens of state and regional incentives on plug-in vehicles and those that use alternative fuels. Many states have a dozen or more programs. Many, however, apply only to businesses. Some credits come in the form of exemptions from fees and inspections. Others are nonmonetary incentives such as carpool lane access and free parking.
Retail buyers in a number of states can get some cost relief in the form of tax credits, rebates, or reduced vehicle taxes or registration fees for buying a qualified alternative-fuel or electric-drive vehicle.
In California, for example, people who buy or lease a new electric car can get a $1,500 cash rebate. That’s in addition to the federal tax credit, and the tandem can reduce the effective out-of-pocket cost of the car by up to $9,000. Plug-in hybrids are a little different. Because they have smaller batteries and burn gasoline part of the time, the reward is offered on a sliding scale, depending on battery size, up to $1,500 under California’s Clean Fuel Reward program.
Plug In America, an advocacy group, has an interactive U.S. map that shows current plug-in car incentives in each state. The U.S. Department of Energy also has an interactive chart of state incentives.
It’s a good idea to be sure about available state and local incentives before you shop. Just because a state has a program doesn’t mean it will continue indefinitely.
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Used Electric Vehicle Rebates
What vehicles are eligible for the used electric vehicle rebate?
- must be purchased from a licensed dealer located in Nova Scotia
- must not have had the Nova Scotia used vehicle rebate previously applied
- licensed dealerships will be responsible for sharing the vehicle identification number for all electric vehicles that receive a used vehicle rebate with the Program Administrator to allow for verification of whether the vehicle has previously had the used vehicle rebate applied
Do I qualify for a used electric vehicle rebate if I lease rather than buy?
Can I purchase a used vehicle outside of Nova Scotia and still receive the rebate?
If I buy a used electric vehicle through a private sale, can I still get the rebate?
What is the maximum rebate that I can expect for a used electric vehicle?
How To Claim The California Ev Rebate
California offers several incentives, including a $7,000 grant based on income eligibility, a $1,500 California Clean Fuel Reward, discounted charging rates during off-peak hours, rebates for level 2 installation, and free charging for one year based on region.
Due to California EV rebates’ high cost and popularity, they installed an income limit of $150,000 for an individual or $300,000 for joint filers. Plug-in hybrids with electric ranges under 35 miles or EVs with a base price above $60,000 are not eligible. The California rebate is cash or a check at the point of sale. A mailed check may take up to 18 months to arrive.
To learn more about the process and apply for a rebate, head to Californias Clean Vehicle Rebate page.
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How To Claim The Ev Federal Tax Credit
Since it is a tax credit, you do not get it immediately upon purchasing the EV. You apply for the EV federal tax credit when you file your taxes for the year you purchased the vehicle. If you purchased a new EV in May of 2021, you would apply for the tax credit when you file your 2021 taxes at the beginning of 2022.
You must fill out IRS Form 8936 when filing your annual income tax returns. Keep in mind that not all online or software-based tax systems support this form.
Is There Any Fine Print For Ev Incentives
Of course, there is. There’s the rule that limits the federal tax credit to the original buyer of a qualified EV or plug-in hybrid vehicle. You should also know about a few other conditions:
As noted earlier, if you’re leasing a vehicle, the credit stays with the manufacturer that’s offering the lease since it is the actual owner of the car. In most cases, however, the tax credit has been factored into the cost of the lease, so the customer benefits.
The federal tax credit isn’t applicable to an electric vehicle being purchased for the purpose of reselling it. That’s a gray area, though, and would be tough for authorities to prove.
The vehicle must primarily be used in the United States.
Plug-in and battery electric vehicles must be built by qualified manufacturers to be eligible for the full $7,500 credit.
Plug-in hybrids and battery electric vehicles also must have battery packs that are rated for at least 4 kWh of energy storage and are capable of being recharged from an external source.
The IRS, of course, always reserves the right to reject a claim for a tax credit.
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Other Tax Credits Available For Electric Vehicle Owners
So now you should know if your vehicle does in fact qualify for a federal tax credit, and how much you might be able to save.
Perhaps, however, you plan to spring for the Tesla Model S or you already drive a 2017 Chevy Bolt and no longer qualify for any tax credit at least not quite yet. Dont worry! Before giving up hope on your tax break quest for the year, keep in mind the other incentives offered in each state.
Electrify Nova Scotia Rebate Program
As of instant rebates will be applied at the time of sale or lease from EV dealerships and e-bike retailers in Nova Scotia who offer this option. Purchases or leases made before this date, or e-bike purchases from retailers who dont offer an instant rebate option, will need to apply for retroactive payment. Applications must be submitted within 30 days of purchase to qualify, and will be provided on a first come-first serve basis.
E-bikes must be purchased new from a retailer with a physical storefront in Nova Scotia . E-bikes ordered directly from e-bike makers or third party online retailers are not eligible.
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What Is The New Federal Ev Tax Credit For 2022
The Build Back Better bill will increase the current electric car tax credit from $7,500 to $12,500 for qualifying vehicles. President Bidens EV tax credit builds on top of the existing federal EV incentive.
The base amount of $4,000 plus $3,500, if the battery pack is at least 40 kilowatt-hours, remains the same. You can qualify for the additional $5,000 if:
- $4,500 EV Tax Credit: If your EV was made in the US with a union workforce
- $500 EV Tax Credit: If at least 50% of the battery components in your EV are made in the US
Some other notable changes include:
- EV vans, trucks, and SUVs with an MSRP of up to $80,000 qualify
- The electric car tax credit is only available to individuals with a gross income of $250,000 or less