Electric Vehicle Tax Credit | Incentive, Break, Rebate, EV Credits

In order to encourage consumers to buy electric powered cars and other vehicles, the federal government and some states offer federal tax credits and other benefits. New federal tax credits for 2010 offer up to $7,500 for the purchase of a brand new electric car. Some smaller plug-in electric vehicles may also be entitled to a tax credit of up to $2,500. Other tax credits are also available for car owners that buy hybrid vehicles and owners that buy kits to convert their existing vehicles to alternative fuel vehicles.

Plug In Electric Drive Vehicle Tax Credit: Commercial and business use vehicles qualify for the federal electric vehicle tax credit assuming that the vehicle meets certain criteria. The car must be used predominantly in the United States and the battery that is used to power the electric car must be rechargeable via an external electricity source with power of 4 kilowatt hours or more. It must also have four or more wheels. If your car meets the necessary criteria then you can claim a minimum of $2,500 and a maximum of $7,500 of tax credit.

Plug In Electric Vehicle Tax Credit

Low speed electric powered vehicles as well as those with less than four wheels are also entitled to electric vehicle tax credit. Similar stipulations do apply – the battery must be a minimum of 4 kilowatt hours for a low speed four wheeled vehicle or 2.5 kilowatt hours for a two or three wheel vehicle. The plug in electric vehicle tax credit is equivalent to 10% of the cost of the vehicle up to $2,500. You cannot claim both credits and should only claim the higher of the two that you are entitled to.

Conversions

Converting existing cars, including hybrids, offers another way to protect the environment and reduce travel costs and if you have recently converted your own vehicle then you too could be eligible for a tax credit. Vehicles converted to electric plug in cars after February 17th 2009 are entitled to 10% of the cost of conversion up to a maximum of $4,000.

State Incentives

Certain states offer additional benefits on top of the federal electric vehicle tax credit. While you should check your own state's laws, two noteworthy states are Georgia and especially California. Zero emission vehicles in both states attract a tax credit of 10% or $5,000, whichever is the lower. These and many other states also offer additional benefits such as free parking in designated car parks and the use of High Occupancy Vehicle lanes without having to meet the passenger number criteria. Other states known to offer tax credits include Colorado and Illinois.

Buying Electric Cars

There are many reasons to buy electric cars; they're not only incredibly beneficial for the environment but are also beneficial to your ongoing driving costs. What's more, thanks to the combination of federal and state electric vehicle tax credit schemes and other local schemes that have been put in place, electric cars have become considerably cheaper to buy than before.

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Hybrid Car Tax Credits