Electric Vehicle Federal Income Tax Credit

Federal Tax Credit Up To $7,500!

Electric vehicles (EVs) purchased in or after 2010 may be eligible for a federal income tax credit of up to $7,500. The credit amount will vary based on the capacity of the battery used to fuel the vehicle.

Phase Out & Termination

The credit begins to phase out for vehicles at the beginning of the second calendar quarter after the manufacturer produces 200,000 eligible plug-in electric vehicles (i.e., plug-in hybrids and EVs) as counted from January 1, 2010. IRS will announce when a manufacturer exceeds this production figure and will announce the subsequent phase out schedule.

Claiming the Credit

Fill out Form 8936, Qualified Plug-in Electric Drive Motor Vehicle Credit.

For vehicles acquired for personal use, report the credit from Form 8936 on the appropriate line of your Form 1040, U.S. Individual Income Tax Return.

For vehicles purchased in 2010 or later, this credit can be used toward the alternative minimum tax (AMT).

If the qualifying vehicle is purchased for business use, the credit for the business use of an electric vehicle is reported on Form 3800, General Business Credit.

When I bought my car the dealer didn't know much about this, other than it was available. I had done a lot of searching before and did not find any complaints of people who tried to get this tax credit and were denied, that is my biggest fear since it is a large percentage of the purchase price and a major reason for me purchasing this car.