There is good news for those buying or leasing personal use electric vehicles, the federal tax credit has been extended through 2023, though it is limited to only electric vehicles that adhere to strict domestic source rules for batteries. Once IRS fully implements the rules very few electric vehicles will fall in this bracket to qualify for the full $7,500 federal tax credit. But not to worry, federal tax credit is not the only incentive available, there is more to it, see how.
Many states are motivating residents to move from poor fuel efficient vehicles to electric alternatives by offering attractive incentives. The incentives are different for different states.
The incentives include vehicle licensing fees or lower sales tax, accessing HOV lanes when driving without any passengers, low or zero vehicle inspection and other financial perks for buying home chargers.
The local electric utilities provide discounts to customers who buy electric vehicles; the rebates vary from as low as $100 to $1,500, at times even more. To add to this, eight states have boosted electrification plate by offering statewide financial incentives to residents buying or leasing electric vehicles. Many states call the incentive, a rebate and not a tax credit. The reason it is called rebate is because it is a lump sum amount paid to the electric vehicle buyer or lessor. The rebate can be received from the dealer on purchase.
The state rebates are often lesser than the maximum $7,500 federal tax credit but the amount is minimum $1,000 to $2,000. In certain states, the rebate can be $7,500, especially for lower-income residents. The rebates are available to businesses and individuals in some states.
There are no strict rules in the case of state rebates like the case of federal tax credit that calls for strict sourcing restrictions. Therefore, it is easy to qualify for state rebates when compared to federal tax credit. Leasing an electric vehicle for 30-36 months can make is eligible for state rebates.
To qualify for the state rebate, you should be a resident of the state for a continuous period of two or three years post purchase or lease of the electric vehicle. There are other states that have income caps and some states have lower caps in comparison with the federals caps. There is a difference in the electric vehicle rebate program in each state, check thoroughly before you buy or lease a vehicle.
In the United States, California, Colorado, Connecticut, Maine, Maryland, Massachusetts, New York and Pennsylvania offer tax rebates to residents who buy or lease electric vehicles. Both state and federal tax credits can be collected. There are instances where the state credits are available only in those cases where you are not eligible for federal credit due to strict domestic sourcing rules for batteries. Other restrictions include income and price, apart from resident status.
Check your state’s electric vehicle rebate program to enjoy the maximum benefits.