Plug-in Electric Drive Vehicle Federal Credit and California Rebate

Federal law allows a tax credit for new qualified plug-in electric drive vehicles purchased after December 31, 2009. See below for the IRS website list of manufacturers of vehicles that qualify for the credit.

To qualify for the credit, a vehicle must meet the following requirements:

  • Vehicle must be new, and must have been acquired for use or lease (not for resale).
  • Vehicle must be manufactured. A conventional vehicle converted to electric drive after-market does not qualify.
  • Vehicle must be used predominantly in the U.S.
  • Gross vehicle weight rating of not more than 14,000 pounds.
  • Vehicle must be propelled by a battery that has a minimum capacity of four kilowatt hours, and can be recharged from an external source of electricity.
  • Vehicle must have at least four wheels and be manufactured primarily for use on public streets, roads, and highways.

The maximum federal credit is $7,500. The base credit amount is $2,500. An additional credit of up to $5,000 may be allowed based on the size of the battery. The credit is increased by $417 if the vehicle uses a battery that has at least five kilowatt hours of capacity, plus $417 for each kilowatt hour of battery capacity over five kilowatt hours.

For individual taxpayers, the credit is applied against the taxpayer’s federal regular tax and alternative minimum tax liability. The credit is not refundable and may not be carried forward or back.

For each manufacturer, the credit begins to phase out after the manufacturer sells more than 200,000 vehicles in the U.S. The credit ends at the beginning of the sixth quarter after the manufacturer reaches the 200,000 vehicle threshold. Based on information on the IRS website, through the third quarter of 2013, no manufacturer has sold more than 41,902 vehicles.

California has no comparable credit. Instead, California has a Clean Vehicle Rebate Project which offers a rebate of up to $2,500 to the purchaser of a qualified plug-in electric drive vehicle. The federal credit is claimed on a tax return. The California rebate is claimed by filing a claim with a non-tax government agency.

MANUFACTURERS OF VEHICLES QUALIFYING FOR FEDERAL CREDIT (from www.irs.gov):

American Honda Motor Co, Inc., AMP Electric Vehicles, Inc., Azure Dynamics, BMW of North America, Boulder Electric Vehicles, Inc., BYD Motors Inc.,  Chrysler Group LLC, CODA Automotive, Electric Mobile Cars, Electric Vehicles International, Fisker Automotive, Inc., Ford Motor Company, General Motors Corporation, Mercedes-Benz USA, LLC, Mitsubishi Motors North American, Inc., Nissan North America, Porsche Cars North America, Inc., Smart USA Distributor LLC, Tesla, Think, Toyota Motor Sales, VIA Motors, Inc., Wheego Electric Cars, Inc.

Please contact Martini, Iosue & Akpovi by phone at (818) 789-1179 if you have questions or want more information.

 

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