We’ve received quite a few questions 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.
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.
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.
Here is the IRS list (as of June 2014) of the auto manufacturers who produce electric cars, along with a link that lists the tax credits allowed for each model:
?????? Index to Manufacturers:
If you purchase an electric car, use the?Form 8936?to claim this tax credit as part of your federal tax filing. Please remember to bring your vehicle?s bill of sale to your tax prep meeting this winter.