Tax credits and incentives for PHEVs and EVs

Have Questions About Federal and State Tax Incentives for EVs and PHEVs?

Written By, Chloe L.

We have noticed that a lot of our customers want more information on the available tax incentives for vehicles that use alternative fuel. NowCar offers several alternative fuel vehicles, and we’ve received many questions about which cars qualify for the federal tax credit, how tax credits work, if there are any state or local tax credits or incentives and many more questions. So, if you have questions about state and or federal tax incentives on fuel efficient vehicles, read below for answers on some of the most popular questions.

Which Vehicles Qualify for the Federal Tax Credit?

All electric vehicles and plug-in hybrid electric vehicles (PHEVs) qualify for federal tax credit, however, hybrid vehicles are not eligible for the federal tax credit.

The amount of money a vehicle qualifies for depends on the capacity of the battery used to power the vehicle. The base tax credit is $2,500 and that requires a vehicle powered by a battery of 4 kWh. For every kWh above 5 kWh qualifies for an additional $417, and the maximum a vehicle can receive is $7,500.

Right now there are more than 29 manufacturers that offer vehicles that qualify for a portion or the full amount of federal tax credit and 41 vehicles qualify for the full $7,500 federal tax credit.

NowCar offers several vehicles that qualify for a federal tax credit and they range in price, size, battery life and manufacturer.

Chrysler Pacifica Hybrid
PHEV
Federal Tax Credit: $7,500
Battery: 16 kWh lithium-ion battery
Total Electric Distance: 33 miles
MPGe: 84 MPGe combined city/highway
Annual Fuel Costs: $950
Savings in Fuel Costs After 5 Years: $2,500
Starting MSRP: $39,995
Shop Now

Chevrolet Bolt EV
EV
Federal Tax Credit: $7,500
Battery: 60 kWh lithium-ion battery
Total Electric Distance: 238 miles
MPGe: 119 MPGe combined city/highway
Annual Fuel Costs: $550
Savings in Fuel Costs After 5 Years: $4,500
Starting MSRP: $37,495
Shop Now

Chevrolet Volt
PHEV
Federal Tax Credit: $7,500
Battery: 18.4 kWh lithium-ion battery
Total Electric Distance: 53 miles
MPGe: 106 MPGe combined city/highway
Annual Fuel Costs: $700
Savings in Fuel Costs After 5 Years: $3,750
Starting MSRP: $34,095
Shop Now

Kia Optima Plug-In Hybrid
PHEV
Federal Tax Credit: $4,919
Battery: 9.8 kWh lithium polymer battery
Total Electric Distance: 29 miles
MPGe: 103 MPGe combined city/highway
Annual Fuel Costs: $800
Savings in Fuel Costs After 5 Years: $3,250
Starting MSRP: $35,210
Shop Now

Kia Niro Plug-in Hybrid
PHEV
Federal Tax Credit: coming soon
Battery: 8.9 kWh lithium polymer battery
Total Electric Distance: 26 miles
MPGe: 105 MPGe combined city/highway
Annual Fuel Costs: $700
Savings in Fuel Costs After 5 Years: $3,750
Starting MSRP: $27,900
Shop Now

Mitsubishi Outlander PHEV
PHEV
Federal Tax Credit: $5,836
Battery: 12 kWh lithium-ion battery
Total Electric Distance: 22 miles
MPGe: 74 MPGe combined city/highway
Annual Fuel Costs: $1,200
Savings in Fuel Costs After 5 Years: $1,250
Starting MSRP: $34,595
Shop Now

A full list of the vehicles that qualify for a federal tax credit is at fueleconomy.gov/feg/taxevb.shtml.

How Do I Receive the Tax Credit?

The federal tax credit is a credit, meaning it is only valid if a taxpayer has a tax balance, or in other words, owes money to the federal government for the year they purchased the vehicle. Additionally, the taxpayer only benefits from the amount of money they owe. For example, if a taxpayer purchases a vehicle that qualifies for a $7,500 tax credit, but the taxpayer only owes $3,000 in federal taxes then the taxpayer only benefits $3,000.

The forms an individual or business needs to file with their taxes to receive the tax credit can be found at fueleconomy.gov/feg/taxevb.shtml.

Do Lessees Qualify for a Federal Tax Credit?

Leases are not eligible to receive the federal tax credit and the leasing company can actually claim the credit.

Are Used Vehicles Eligible for a Federal Tax Credit?

No, only new vehicles are eligible for the federal tax credit.

Does Florida offer any incentives for alternative fuel vehicles?

Florida offers Electric Vehicle Supply Equipment (EVSE) Financing. With the EVSE, local governments can offer property owners funding to install EVSE installations on their property. Additionally, Sarasota County offers businesses, nonprofits and local governments a rebate for installing EVSE equipment. More information on Florida’s tax incentives is available at afdc.energy.gov/laws/11813.

Any more questions about the federal tax incentives on electric vehicles or PHEVs? Reach out to NowCar on Facebook!

FOLLOW US