You may be eligible for a tax credit if you purchase a plug-in electric car, including a Tesla. Here’s what you need to know about the electric car tax credit.
What’s A Tax Credit?
A tax credit reduces the amount of tax you owe. It reduces your tax liability dollar-for-dollar. Non-refundable tax credits expire the year they’re used (or not used). Refundable tax credits can increase your tax refund if not used.
A tax credit and tax deduction both provide tax breaks. The difference is a deduction can reduce the amount of your taxable income.
What Is The Electric Car Tax Credit?
The government aims to spur the electric-car industry and introduced an electric car tax credit in 2008. This financial incentive offers up to $7,500 in a non-refundable tax credit for new electric vehicles purchased by taxpayers.
How Does The Electric Car Tax Credit Work?
For electric vehicles purchased after December 31, 2009, you get a credit for at least $2,500. The tax credit can increase up to $7,500 depending on a few qualifiers:
- the kilowatt capacity
- how many vehicles the manufacturer sold.
You receive an additional $417 for each kilowatt hour of battery capacity in excess of 5 kilowatt hours. The credit begins to phase out after a manufacturer sells at least 200,000 vehicles. Tesla is the only company that’s hit the 200,000 threshold so far.
Are There Any Other Incentives For Buying An Electric Vehicle?
Many states also offer incentives for buying an electric vehicle. This may include tax credits, access to carpool lanes and more. The Department of Energy offers a website to find which state laws may apply to you.
Anything Else To Know About The Electric Vehicle Tax Credit?
The electric car tax credits have a few more stipulations:
- You must use the vehicle primarily in the United States
- you typically cannot get the tax credit for a used vehicle
- the tax credit cannot be passed on
- you can’t get the credit if you buy a new vehicle to resale
Do I Get A Tax Credit For Buying a Tesla?
Yes, you can claim tax credits for a new Tesla. We’ve put together a chart letting you know what you can claim.
|Vehicle||Purchased through 12/31/2018||Purchased from 1/1/2019 through 6/30/2019||Purchased from 7/1/2019 through 12/31/2019||Credit available 1/1/2020|
|Tesla Roadster (2008-2011)||$7,500||$3,750||$1,875||$0|
|Tesla Model S (2012-2018)||$7,500||$3,750||$1,875||$0|
|Tesla Model X (2016-2018)||$7,500||$3,750||$1,875||$0|
|Tesla Model 3 Long Range (2017-2018)||$7,500||$3,750||$1,875||$0|
How To Claim The Electric Car Tax Credit
You can claim the electric vehicle tax credit using IRS Form 8936. If it’s for personal use, you can then report the credit on your 1040 when filing your federal taxes.
Your state may also offer tax credits, so consult your tax pro before making any filings.
What Other Cars Qualify For This Federal Tax Credit?
Cars qualify for this tax credit if the vehicle draws propulsion energy from a battery with at least 5 kilowatt hours of capacity. Some cars that fit these criteria include:
|Make||Model||Model Year||Credit Amount|
|Audi||A3 e-tron ultra||2016||$4,502|
|BMW||i3 (60Ah) Sedan||2017||$7,500|
|BMW||Mini Cooper S E Countryman ALL4||2018-2019||$4,001|
|GM||Cadillac ELR||2014, 2016||$7,500|
|GM||Chevrolet Spark EV||2014-201||$7,500|
|GM||Cadillac CT6 Plug-in||2017, 2018||$7,500|
|Hyundai||Sonata Plug-in Hybrid Electric Vehicle||2016-2018||$4,919|
|Hyundai||Ioniq Electric Battery Vehicle||2017, 2018||$7,500|
|Hyundai||Ioniq Plug-In Hybrid Electric Vehicle||2018||$4,543|
|Jaguar Land Rover||Jaguar I-Pace (First Edition, HSE, SE, S models)||2019||$7,500|
|Jaguar Land Rover||Land Rover Range Rover PHEV (HSE)||2019||$7,087|
|Jaguar Land Rover||Land Rover Range Rover Sport PHEV (HSE)||2019||$7,087|
|Kia||Optima Plug-in Hybrid||2017-2018||$4,919|
|Kia||Niro Plug-in Hybrid||2018||$4,543|
|Mercedes-Benz||B-Class EV (B250e)||2014-2017||$7,500|
|Mercedes-Benz||GLE550e 4m PHEV||2016-2018||$4,460|
|Mercedes-Benz||smart Coupe EV||2013-2018||$7,500|
|Mercedes-Benz||smart Cabrio EV||2013, 2014, 2015, 2017, 2018||$7,500|
|Mitsubishi||i-MiEV||2012, 2014, 2016, 2017||$7,500|
|Mitsubishi||Outlander PHEV||2018, 2019||$5,836|
|Porsche||Panamera S E-Hybrid||2014, 2015, 2016||$4,752|
|Porsche||Cayenne S E-Hybrid||2015-2018||$5,336|
|Toyota||Prius Prime Plug-in Hybrid||2017-2019||$4,502|
|Toyota||Prius Plug-in Electric Drive Vehicle||2012, 2013, 2014, 2015||$2,500|
|Toyota||RAV4 EV||2012, 2013, 2014||$7,500|
|Volkswagen||e-Golf||2015, 2016, 2017, 2018||$7,500|
|Volvo||XC90 Excellence||2018, 2019||$5,002|
|Volvo||XC-90 T8 Twin Engine Plug In Hybrid||2016, 2017||$4,585|
A full list of eligible vehicles can be found on the IRS website.
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MileIQ’s blog does not constitute professional tax advice. You should contact your own tax professional to discuss your situation.