Thinking about purchasing an Electric Vehicle (EV) or a Plug-In Hybrid Electric Vehicle (PHEV)?  The Federal government and many states offer incentives to people who do.  Currently, the Chevrolet Volt is the highest selling Plug-In Hybrid vehicle in the United States followed by the plug in Toyota Prius and the Nissan Leaf.  Many taxpayers are making the switch to reduce what is commonly referred to as their “carbon footprint.”  Plus, these cars do actually look like normal cars and are less toxic to the environment.  They do not need oil changes—they don’t even have an engine!

 

www.pluginamerica.org, whose mission is to “accelerate the shift to plug-in vehicles powered by clean, affordable, domestic electricity to reduce our nation’s dependence on petroleum and improve the global environment” is a 501(c)(3) public charity dedicated to this purpose.  Visit their website at www.pluginamerica.org for more information and help.

 

The tax credit for purchasing a plug-in hybrid or electric car is $2,500 to $7,500.  The amount depends on the size of the battery.  The credit was created in the American Recovery and Reinvestment Act—aka the stimulus package. There is a phase out after an automaker sells 200,000 vehicles that are eligible for the credit.  If you are curious about the quarterly sales, the IRS has posted that information for some automakers: http://www.irs.gov/Businesses/IRC-30D-%E2%80%93-Plug-In-Electric-Drive-Motor-Vehicle-Credit-Quarterly-Sales.

 

There are state incentives as well.  For example, In Arizona, there are reduced license fees and tax credits for installing EV charging stations.  To check your state incentives, visit http://www.pluginamerica.org/incentives

 

Also, taxpayers often get insurance discounts for purchasing an electric car.  Check with your insurance provider to see if you qualify for any breaks.

 

Where is the credit reported?  Use Form 8936

 

Form 8936—Qualified Plug-in Electric Drive Motor Vehicle Credit (http://www.irs.gov/pub/irs-pdf/f8936.pdf)
Use this form for all electric vehicle types purchased in 2012 or later.    For example, if you purchase a Chevy Volt it would go on the 8936.
Also, new qualified two or three wheeled plug in electric vehicles would go on the 8936.  However, if it was acquired before 2012, report it on Form 8834.

 

How does the Government know you’re making a legitimate claim?  The forms ask for the Vehicle Identification Number or (VIN) which has all of the information they need to prove your claim.

 

Not sure if your vehicle qualifies or how much of a credit you should get?  Check out http://www.irs.gov/Businesses/Qualified-Vehicles-Acquired-after-12-31-2009.  Take the Chevrolet Volt for example.  Click on General Motors and you can see the 2011, 2012, 2013, and 2014 Volts all have a credit amount of $7,500.  Most of the vehicles do in fact have a credit amount of $7,500.

 

There is no phase out of the credit based on your income.

 

Imagine a highway of all electric cars.  What would it sound like?