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Electric vehicles are no longer a transportation option that appeals predominantly to climate-conscious car buyers. The EV market has experienced dramatic growth over the past few years, with registrations increasing by 60 percent through the first few months of 2022, according to Experian.
At the same time, the electric vehicle options continue to diversify and now include a wide selection of styles and price points. Driving electric also comes with many money saving perks. Besides the obvious — saving on the cost of gas — there are electric car tax credits provided to those who purchase an electric vehicle. Depending on your home state, owning an electric vehicle can save you thousands.
The easiest way to see how much the market has grown is to look at recent EV information.
The EV tax credit is a federal incentive built to encourage drivers to purchase an electric vehicle. This incentive is not a check you receive in the mail following a vehicle purchase, but rather a tax credit worth up to $7,500 that you become eligible for. This credit applies to all electric and plug-in vehicles, but specific credit amounts can be found via the U.S. Department of Energy’s website, fueleconomy.org.
To qualify for available incentives, your vehicle must meet certain specifications, including:
It is also important to remember that purchasing the vehicle alone does not ensure that you get the tax credit. You must file Form 8936 with the IRS.
The federal tax credit does not apply to those leasing electric vehicles. Instead, that money will go to the lessor. But this still can lower a monthly payment — if the lessor chooses to factor that incentive into your lease agreement. Mention this during negotiation to try and save money.
Certain states have incentives that apply regardless of whether you are leasing or buying.
It is likely that the credit will be around indefinitely, especially with increased pushes for more climate-aware vehicles. But the available vehicles are constantly shifting. This is due to the phase-out structure of tax credits.
When a particular manufacturer reaches 200,000 electric vehicles sold for use in the United States, those vehicles are no longer eligible for credits. Because of this rule, it’s important to check if the vehicle you intend to purchase is still available for credit.
If two members of the same household purchase electric vehicles for themselves, they will be able to separately claim the credit for their individual cars. If the two buy an EV together, the credit may only be claimed once.
Any driver who submits the necessary information for a qualifying vehicle using Form 8936 may be eligible for an EV tax credit. But the type and amount of income that you receive can affect what tax credits you receive.
Unfortunately, not every state offers EV tax credits and incentives. In fact, more than half of the states in the country do not have an EV tax credit program. So, before you set out to buy a charging station for your garage, determine how much you can save in your home state.
Here are some specific EV tax credits offered by vehicle brands. Just as each state differs, consider the benefits from one vehicle brand compared to another.
|Vehicle brand||Available credit|
|Audi||$4,502 to $7,500|
|BMW||$3,793 to $7,500|
|Chevrolet||No longer eligible|
|Ford||$4,007 to $7,500|
|Honda||$3,626 to $7,500|
|Hyundai||$4,543 to $7,500|
|Jaguar/Land Rover||$6,295 to $7,500|
|Kia||$4,543 to $7,500|
|Mercedes||$3,501 to $7,500|
|Mitsubishi||$5,836 to $7,500|
|Porsche||$3,667 to $7,500|
|Subaru||$4,502 to $7,500|
|Tesla||No longer eligible|
|Toyota||$2,500 to $7,500|
|Volvo||$4,585 to $7,500|
Information gathered from U.S Department of Energy