By filling out Form 8936 at the same time that you file your federal tax returns, you can qualify for up to $7,500 in tax credit earnings. Learn more about how to claim your electric vehicle credits and potentially save thousands of dollars on Tax Day.
Did you know that you potentially qualify for a federal tax credit just for charging your electric vehicle at home? That’s right. Should you qualify, the federal government could give you back up to $7,500 at the time you file your annual return in the form of a tax credit. And that’s not all; you may also qualify for additional rebates by city or state as well. However, this greatly depends on your region (For example, California is the number one state in the U.S. to offer its residents EV rebates).
Every year, we all dread April 15th as we often have to write a big check to Uncle Sam for Tax Day. However, mindfully investing in an electric vehicle might make that day just a little easier.
Qualified owners of a new electric vehicle may have their federal taxes significantly lowered (or erased altogether) for a tax calendar year. This of course all depends on their income, vehicle type, and whether the credit applies to their circumstances.
Which type of electric vehicle qualifies for a tax credit?
There are several factors that qualify or disqualify a vehicle owner in terms of receiving a federal EV income tax credit. An electric vehicle owner should qualify for the federal EV income tax credit if they own an all-electric vehicle OR a plug-in hybrid vehicle (PHEV) that runs off a battery with at least 5-kilowatt hours (Chevrolet Volt, Toyota Prius Prime, Kia Niro, etc.) However, there are some limitations—as we will walk you through below.
In order to qualify for the federal tax credits, the following must apply to you:
1. New Vehicles Only, Not Used — The tax credit is only available to the first on-paper owner of a new vehicle (please note: leased vehicles do qualify for a tax credit benefitting the leasing company, but not the driver)
2. Purchased after Dec. 31, 2009 — You must have purchased the vehicle after Dec. 31, 2009, and must have registered it within the year you claim the credit
3. You must be eligible to file your taxes in the United States of America and have a valid driver’s license in your state
4. You must drive primarily in the United States, and must have permanent U.S. residence when claiming the credit (at least 6 months in a calendar year)
Please note that the available federal tax credit starts to phase out for a manufacturer’s vehicles at the beginning of the second calendar quarter after the automaker has sold 200,000 EV units in that same model in the last decade. For example, the “IRC 30D” Credit does not apply to General Motors EVs if the new vehicle was purchased after March 2020. The actual tax credit amount varies on different EV models. It is important to check whether your vehicle qualifies before assuming you will receive a federal credit.
Please refer to the complete list on the U.S. Department of Energy’s website to see if you qualify based on your vehicle.
How do I claim my federal EV tax credit?
You’ll need to fill out the IRS Form 8936 for the Qualified Plug-in Electric Drive Motor Vehicle Credit. You attach this form to your federal tax returns and send it in at the time of filing your annual income taxes.
The actual tax credit amount varies on different EV models. You cannot transfer this credit to anyone besides the original registered owner of the new electric vehicle or PHEV. See the official IRS form here.