Plug-in Electric Vehicle Tax Credit Explained

December 7, 2009

Click here for links to guidance  on several relevant plug-in vehicle tax credits:

http://www.irs.gov/newsroom/article/0,,id=206875,00.html

November 30, 2009

Link to the IRS' November 30 guidance on the plug-in credit.

http://www.irs.gov/irb/2009-48_IRB/ar09.html

November 13, 2009:
IRS Plug-in Credit/Links to Tax Credits by Manufacturer, Vehicles

July 13, 2009:

IRS Tax Credit Guidance for Low Speed and 2/3 Wheel Vehicles

The IRS has issued guidance on certifying low speed and 2&3 wheel vehicles for plug-in credit. 

Read the IRS guidance text HERE (PDF file).

June 15, 2009:

• IRS Guidance for the Qualified Plug-in Electric Vehicle Tax Credit

The IRS has agreed that low speed electric vehicles qualify for the original plug in credit included in HR 1424, the Emergency Economic Stabilization Act of 2008. The credit is available on qualified low speed electric vehicles purchased in 2009.  EDTA is pleased with the IRS interpretation and tax credit for low speed electric vehicles, which are an important, growing, on-road application of electric drive technology.  

Read the IRS tax credit guidance text HERE (PDF file). 

History of the Plug-in Electric Vehicle Tax Credit: 

In October 2008, Congressional leaders included an important credit for purchase of plug-in electric drive vehicles in H.R. 1424, the Emergency Economic Stabilization Act of 2008.  The bill also supports investment in fuel cells, electric recharging property, smart meters and grid modernization.

In February 2009, the American Recovery and Reinvestment Act modified the tax credit language.  It increased the number of vehicles eligible for the credit by changing the existing phase-out trigger to 200,000 vehicles per manufacturer (vs. the HR 1424 cap of 250,000 vehicles industry-wide.)  It also removed the credit for vehicles over 14,000 pounds.  The amendments of HR1 do not take effect until 2010. 

About the Plug-in Electric Drive Credit:

The energy package establishes a credit for purchase of plug-in electric drive vehicles, which will help consumers and manufacturers to grow the marketplace for clean, efficient cars and trucks.

Credit Amount/Criteria:

Plug-in electric drive vehicles with batteries of at least 4 kWh qualify for a $2,500 credit. An additional $417 is provided for each additional kWh, up to $7,500 for vehicles up to 10,000 lbs. Vehicles up to 14,000 lbs qualify for a $10,000 credit.

Phase-out: The credit begins to phase out after 200,000 qualifying vehicles are sold in the U.S. per manufacturer.

AMT: The credit is available against the alternative minimum tax.

EDTA Comment:

"EDTA is extremely pleased that the bills passed include incentives to reduce our dependence on oil with electric drive transportation," says EDTA President Brian Wynne. "Congress has provided the paving stones for a comprehensive electric drive transportation policy, and we look forward to working with them and the new Administration next year to build on this path to clean, affordable and secure transportation."