What Are the Tax Incentives for an EV?

May 22nd, 2022 by

Anyone who purchases an all-electric or plug-in hybrid vehicle is eligible for a federal tax credit up to $7,500. In addition to this, most states also offer tax incentives for those who buy or drive luxury electric vehicles. At Ray Catena Auto Group, you can contact us and our knowledgeable staff can help you understand the generous incentives available in NY and NJ.

View Luxury Electric Vehicle Inventory

You have probably heard about luxury electric vehicle owners earning tax incentives through their cars. Whether you own an LEV or are considering buying one, you’re probably wondering what, if any, tax incentives there are. If so, there is plenty of good news. First, you can indeed qualify for a federal tax credit simply by purchasing an electric vehicle. It really is that simple. And if that’s not enough, your state will very likely also reimburse you for your LEV purchase. Let’s break down what, exactly, these tax incentives look like on the federal and state level.

Porsche Taycan 4s Luxury Electric VehicleFederal Tax Credit for New Electric Vehicles

The official wording of the federal tax credit for electric vehicles states: “All-electric and plug-in hybrid cars purchased new, in or after 2010, may be eligible for a federal income tax credit of up to $7,500.”

This means that both fully-electric cars and plug-in hybrid vehicles are eligible for the tax credit. It also tells us that only new vehicles (not pre-owned) qualify for this particular credit. The most complicated part of this description is at the end: “tax credit up to $7,500.” You are not alone if you’re wondering what, precisely “up to $7,500” means.

The credit up to $7,500 means you can receive a credit on income tax owed up to $7,500 that year. The tax credit will only cover income taxes up to the amount you owe. So, for instance, if you owe $5,000, your EV tax credit will “only” be $5,000. You will not be reimbursed the additional $2,500.

The exact amount of the tax credit is determined by the battery capacity of your LEV. Most fully-electric vehicles qualify for the full $7,500.

Mini Cooper SE Luxury Electric VehicleState Tax Incentives for Electric Vehicles

In addition to the federal tax credit, most states also offer some sort of incentive for LEV drivers. These incentives are separate from, and in addition to, the federal tax incentive. Each state’s incentives are unique. 

New York State Incentives for Electric Cars

New York state offers a $2,000 “Drive Clean Rebate” for anyone who purchases an electric vehicle. In this program, the state simply refunds the car buyer up to $2,000 after they purchase their new LEV. This is just one of many ways that New York state has incentivized electric car buying in recent years.

New Jersey State Incentives for Electric Cars

The state of New Jersey offers a couple of different, non-exclusive tax incentives for luxury electric vehicles. First, New Jersey offers an EV Rebate similar to New York’s Drive Clean Rebate. In New Jersey’s program, buyers are eligible for a rebate of $25 per mile of EPA rated all-electric range. The rebate is capped at $2,000 for purchases under $45,000, and at $5,000 for purchases above $45,000.

New Jersey also exempts all “Zero Emission Vehicles” from state sales tax. Most all-electric vehicles meet the state’s “ZEV” qualifications.

Ray Catena is the region’s leading dealer of luxury electric vehicles – visit us in person to learn more about the financial advantages available through EV tax incentives, or view our inventory of Electrified Luxury.

Learn more about electric cars: