What incentives can you get for buying an electric car?
Considering the many benefits of electric vehicles and thinking about switching to one? Electric cars come with a variety of financial incentives across the U.S. These incentives take different forms and have varying eligibility requirements. From federal tax credits to state rebates and clean vehicle loans, here are the key financial incentives and grants available for electric vehicles in the U.S.
Federal tax credit for new or used electric vehicles
One of the most well-known financial incentives for electric vehicles in the U.S. is the federal tax credit. This credit applies to both new and used electric vehicles, with eligibility rules recently updated under the Inflation Reduction Act of 2022.
How the federal tax credit works and eligibility requirements
The federal tax credit applies to the purchase of new or used electric vehicles, including both cars and vans. Eligible vehicles must either be fully electric, hydrogen fuel cell vehicles, or plug-in hybrids. One key condition for eligibility is that the vehicle must meet certain battery and assembly requirements.
There are also income limitations for buyers. For new vehicles, individuals must have an adjusted gross income (AGI) of less than $150,000 (or $300,000 for joint filers) to qualify for the credit. For used vehicles, the AGI limit is $75,000 (or $150,000 for joint filers).
How much is the federal tax credit?
The federal tax credit for electric vehicles can be worth up to $7,500 for new vehicles. For used electric vehicles, the credit can be up to $4,000. The exact amount depends on factors such as the buyer’s income and the vehicle's battery capacity. Dealers may also be able to apply the credit directly to the vehicle’s purchase price to lower costs upfront.
State rebates and incentives for electric vehicles
In addition to federal tax credits, many U.S. states offer their own rebates and incentives for electric vehicle buyers.
Overview of state-level electric vehicle rebates
States such as California, New York, and Colorado provide rebates or tax credits for purchasing electric vehicles. These state incentives can vary significantly by location, income, and vehicle type.
For example, California offers a Clean Vehicle Rebate Program (CVRP) that provides up to $7,500 for low-income buyers of new electric vehicles. Colorado offers a state tax credit of $5,000 for new electric vehicles. Other states provide incentives like tax exemptions, utility rebates, and free or discounted charging.
Low-interest loans for clean vehicles
In some states, low-income buyers can access special loan programs to help finance the purchase of an electric vehicle.
What is a clean vehicle loan?
Clean vehicle loans are designed to help low-income individuals, or those with limited credit access, purchase or lease electric or plug-in hybrid vehicles. These loans typically come with low-interest rates and flexible terms, making it easier for buyers to afford electric vehicles.
Programs such as California’s Clean Vehicle Assistance Program or Vermont’s Drive Electric Loan Program offer financing options that may include rebates and incentives. These programs are aimed at reducing the upfront cost of electric vehicles, particularly for those in vulnerable financial situations.
How to qualify for state and federal incentives
The exact amount of financial assistance depends on factors like vehicle price, buyer income, and location. For instance, low-income buyers may qualify for higher rebates, while specific vehicle types might be eligible for additional funds.
To find out what incentives apply to you, there are online calculators and eligibility tools, often provided by state governments or auto dealers, that can help determine the exact rebates and tax credits available in your area.
Switching to an electric vehicle is not only an environmentally friendly choice but also a financially smart decision, with numerous incentives and programs available to help reduce costs. Whether you’re buying new or used, these programs make owning an electric vehicle more accessible than ever. Additionally, electric vehicles are available in utility models—consider renting an electric utility vehicle from a local owner for your next project.
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