We’ve received quite a few questions recently about the federal income tax credit available to people who purchase electric cars. The maximum tax credit is currently $7,500, and there appear to be 24 manufacturers who produce electric cars at this time.
The good news is that there is no income limitation for this $7,500 tax credit.? Plus. you can still claim this credit even if you are subject to the dreaded Alternative Minimum Tax.??According to the IRS, here is a list of the auto manufacturers who produce electric cars, along with a link that lists the tax credits allowed for each of their models:
Index to Manufacturers
(Last Reviewed or Updated: 23-Jun-2014)
200K Car Limit
Like with the Hybrid Car Tax Credit, this credit will begin to phase-out on some of the more popular models.? To level the playing field for each manufacturer, the allowable tax credit starts to disappear for a manufacturer once they sell 200,000 plug-in electric vehicles, as follows:
- The full credit is allowed through the end of the quarter following the quarter during which the manufacturer sells its 200,000th plug-in electric vehicle.
- The credit is cut in half for the subsequent two quarters.
- The credit is then cut to a quarter of the original credit for the subsequent two quarters.
- No credit is allowed for vehicles purchased from that manufacturer thereafter.
As we discussed in a previous post, the phase-out of the Hybrid Vehicle Tax Credit began once a manufacturer sold 60,000 vehicles. The popularity of the Toyota and Lexus hybrids caused the credit for their models to begin to be phased-out almost immediately.?With cumulative sales of the Nissan leaf at 64,782 and the Ford electric cars at 30,374?, there is no reason to believe that this credit will be phased-out any time soon for any of the brands.
If you purchase an electric car, use the?Form 8936, Qualified Pug-in Electric Drive Motor Vehicle Credit?to claim this valuable tax credit as part of your federal tax filing.