Electric cars continue to improve, but they’re still relatively rare, so the price tag remains high. It will likely remain so until there are more manufacturers and a higher level of demand. That’s why the Federal government is continuing to provide tax credits to buyers of electric vehicles.
There are also a range of state programs you should look into.
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Federal Tax Credits on Electric Cars
The primary Federal tax credit you should be looking at is the Qualified Plug-In Electric Drive Motor Vehicle Tax Credit. Nearly every type of electric car qualifies for this tax credit. It’s worth $7,500 in tax deductions.
Take note that this tax credit will phase out. Each manufacturer has a separate tax credit. Once they sell 200,000 electric cars, the credit won’t be usable if you buy a car from that manufacturer.
Throughout 2020, expect most manufacturers to still have this tax credit available. Tesla is the notable exception, as they have already passed the 200,000 mark.
Nissan and Chevy are also nearing this threshold, so it’s highly recommended that you make your purchase now and claim this tax credit while you still can.
State Tax Credits for Purchases of Electric Cars
There are a range of state and local credits also available for electric cars. These apply not only to electric cars but also electric car chargers.
How to Claim the Electric Car Tax Credit
We recommend filing your taxes online this tax season because of all of the tax benefits that you will receive.
You never have to know the tax laws or access tax tables during the filing process! The program asks you simple questions to fill in the proper form, helps you claim every tax credit and deduction that you qualify for, and you will get the largest refund possible.
They even have a free tax refund calculator available that allows you to know the amount of money that you will be getting back in your tax refund.
Their online filing services have the ability to import your W2 information into your tax return so you can avoid worrying about your forms being delivered via snail mail.