During the last couple of decades, hybrid and electric vehicles (EV) have become a common sight on American roadways, and with infrastructure to support them expanding across the country and more people considering the environmental impact of consumer purchases, EVs aren't going anywhere. Consumers gain a lot of benefits from buying these eco-friendly forms of transportation, from cutting their carbon footprint to reducing fuel costs.
One thing that may be going the way of the dodo, however, is incentives designed to encourage consumers to go electric. Luckily, there are still some you can take advantage of if you've recently bought a qualifying electric vehicle or you're looking to buy one in the near future. Here are some tips to claim tax credits related to your EV purchase.
Federal Tax Credit
Since 2010, consumers who purchase a qualified EV or hybrid plug-in vehicle have been eligible for a federal tax credit of up to $7,500. The amount you get will depend on the type of car you buy. Unfortunately, this prime tax cut is on the way out.
The federal electric vehicle tax credit was set up to be phased out, with the value of credits dropping and then completely disappearing, based on sales of specific, qualified vehicles (and the number of incentives claimed). This started back in 2018 with Tesla, and several vehicles hit the threshold in 2019, with remaining credits set to expire by the end of 2020.
If you want to attempt to claim this tax credit for an EV purchase, you'll need to fill out form 8936 and report it on your 1040 when filing your taxes. Just be aware that your particular vehicle may no longer be eligible.
In addition to the federal tax credit, you could qualify for cash back on your EV purchase or lease through the Clean Vehicle Rebate Project (CVRP), designed to reduce the up-front cost of fuel cell, battery electric, and plug-in hybrid vehicle purchases. Qualified purchases or leases can net you up to $4,500 in rebate money, while eligible low-income households could qualify for up to $7,000 in increase rebate dollars.
In addition to federal tax credits, you could also be eligible for incentives at the state level. These vary by state, so you'll want to view incentives for your state to see if you can benefit from additional options to recoup costs when you purchase a hybrid or electric vehicle.
While there's not much time left to claim federal tax incentives for your EV purchase, you're not too late to file a claim, and you can always recoup some costs with additional incentives through the CVRP or rebates from your state of residence.