There are a multitude of reasons why switching to an electric vehicle is beneficial. It can tremendously benefit the environment by decreasing or eliminating carbon emissions. They also offer the convenience of charging right at home instead of having to travel to the pump a few times a month. If environment conservation or convenience aspects do not appeal to you, then perhaps the financial incentives would. Most electric vehicles and some plug-in hybrids purchased in or after 2010 may be eligible for a federal income tax credit from the IRS. The credit starts at $2,500 and the full credit is $7,500 with the amount depending on the capacity and size of the battery. Because of the phase out, the sooner you buy, the more you will get back where as waiting later may lead to less credit received. This federal tax incentive includes all leading EVs currently in the market (Nissan Leaf, Chevy Spark, Chevy Volt, Tesla Model S, Tesla Roadster, Toyota RAV4 EV and more).
The criteria to receive this tax credit are that the vehicle must:
- Be made by a manufacturer
- Be treated as a motor vehicle for purposes of the title II of the Clean Air Act
- Have a gross vehicle weight rating (GVWR) of 14,000 lbs. or less
- Be propelled to a significant extent by an electric motor that draws electricity from a battery
- Be a new vehicle
- Be acquired for use or lease by the taxpayer
- Be mostly used in the U.S.
- Be placed in service during or after the 2010 calendar year
Other state tax incentives can be claimed based on each state’s individual laws. For example, the state of Maryland also offers a Plug-in Electric Vehicle (PEV) tax credit. New electric vehicles purchased between July 1, 2014 and June 30, 2017 are eligible for a credit up to $3,000 (calculated as $126 per kilowatt-hour of battery capacity of the vehicle). These credits along with better electricity rates from companies, discounts on insurance, and tax credits for charging equipment all are incentives offered for electric vehicle owners. Overall, driving vehicles with alternative fuel will save you money right away with tax benefits and in the long run with less (or zero) money spent on gasoline.