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Although electric vehicles (or EVs) are a small percentage of the cars on the road today, they\u2019re increasing in popularity all the time. And if you buy one, you may be eligible for a federal tax break.<\/p>\n
The tax code provides a credit to purchasers of qualifying plug-in electric drive motor vehicles including passenger vehicles and light trucks. The credit is equal to $2,500 plus an additional amount, based on battery capacity, that can\u2019t exceed $5,000. Therefore, the maximum credit allowed for a qualifying EV is $7,500.<\/p>\n
The EV definition<\/strong><\/p>\n For purposes of the tax credit, a qualifying vehicle is defined as one with four wheels that\u2019s propelled to a significant extent by an electric motor, which draws electricity from a battery. The battery must have a capacity of not less than four kilowatt hours and be capable of being recharged from an external source of electricity.<\/p>\n The credit may not be available because of a per-manufacturer cumulative sales limitation. Specifically, it phases out over six quarters beginning when a manufacturer has sold at least 200,000 qualifying vehicles for use in the United States (determined on a cumulative basis for sales after December 31, 2009). For example, Tesla and General Motors vehicles are no longer eligible for the tax credit.<\/p>\n The IRS provides a list of qualifying vehicles on its website and it recently added a number of models that are eligible. You can access the list here: https:\/\/bit.ly\/2Yrhg5Z<\/a>.<\/p>\n Here are some additional points about the plug-in electric vehicle tax credit:<\/p>\n Electric motorcycles<\/strong><\/p>\n There\u2019s a separate 10% federal income tax credit for the purchase of qualifying electric two-wheeled vehicles manufactured primarily for use on public thoroughfares and capable of at least 45 miles per hour (in other words, electric-powered motorcycles). It can be worth up to $2,500. This electric motorcycle credit was recently extended to cover qualifying 2021 purchases.<\/p>\n These are only the basic rules. There may be additional incentives provided by your state. Contact us if you\u2019d like to receive more information about the federal plug-in electric vehicle tax break.<\/p>\n\n
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