How Does the Federal Tax Credit for Electric Cars Work?

If you’ve been searching for a new electric vehicle (EV) to take on your Rye commute, you may have heard about the electric car incentives like the CT tax credit for electric cars. What is it, and how does it work? The federal tax credit starts at a minimum of $2,500 and goes up to $7,500, depending on the car’s traction battery capacity and gross vehicle weight rating. You could earn this credit when you purchase an eligible EV, making it another reason drivers may opt for an EV like the latest EQS. Learn more about the CT electric car incentives, and don’t hesitate to contact our Greenwich finance department for more information.

Which Models are Applicable for this Electric Car Tax Credit?

When it comes to electric car incentives, many think every electric model is applicable, but that’s not the case. You could earn this credit by purchasing a qualified new EV after December 31, 2009. Also, the qualifying electric car must meet the following criteria:

• Draws propulsion using a traction battery that has at least 5 kilowatt-hours (kWh) of capacity
• Uses an external source of energy to recharge the battery
• Has a gross vehicle weight rating (GVWR) of up to 14,000 pounds
• Meets specified emission standards
• Is driven mostly in the United States

Stamford drivers can use this tool to estimate the tax credit for the model they’re interested in buying. If you’re thinking about a plug-in or battery EV, the model you want must get built by qualified manufacturers to earn the max CT tax credit for electric cars, which is $7,500. The car must also have battery packs rated for at least 4 kWh of energy storage and can be recharged from an external source.

Am I Eligible for the Federal Electric Car Tax Credit?

After checking that the EV you’re interested in is qualified for this tax credit, it’s time to see if the credit can get applied to your taxes. If you choose to lease an electric vehicle, the tax credit goes to the lending institution since they own the car.

Once you’re all set on purchasing an EV, you need to consider how much you’ll owe in income tax for that year, because it caps how much of the tax credit you can get. So, if you purchase an electric model that’s eligible for the entire $7,500 and you owe $3,000 in income tax, you only earn $3,000 of credit. Also, if the model is only eligible for $1,500, that’s what you will earn instead. To earn the eligible electric car tax credit for $7,500, you must owe at least $7,500 in income tax the year you purchase the EV.

Lastly, you cannot pass on the tax credit to another driver, even if you decide to sell your EV. Only the registered owner of the eligible vehicle can claim the credit.

How Long Will the Federal Electric Car Tax Credit Be Available?

If you’re in CT, the tax credit for electric cars will stop at a certain point. Once the manufacturer has sold 200,000 eligible plug-in electric models or EVs, the credit will phase out after the second quarter. Keep in mind that some models have already reached this limit, so you won’t be able to claim this credit. For example, any Tesla and General Motors (GM) EVs won’t qualify for the credit. You can check out the list of qualifying manufacturers from the IRS.

Test Drive a New Electric Vehicle at Mercedes-Benz of Greenwich!

Now that you know about the CT electric car incentives, we want to help you find the new EV that’s sure to enhance your New Canaan commute and everyday needs. Apply for financing and estimate your current vehicle’s value right at home in minutes. Contact us when you’re ready to get things started!