Tax Credits for Plug-In Electric Drive Vehicles

Eco-friendly electric vehicles have received another boost in popularity after the federal government introduced tax credits for individuals and businesses opting to purchase plug-in electric drive motor vehicles.  These tax credits offer a direct reduction to the tax liability owed to the federal government. Select states also offer additional rebates to owners of alternative energy vehicles.

Electric Vehicles

Back in 2008, the IRS implemented Internal Revenue Code (IRC) 30D to give tax credits to qualified plug-in electric drive motor vehicles. IRC 30D states that for vehicles acquired after December 31, 2009, the credit is equal to $2,500, plus $417 for a vehicle that draws propulsion energy from a battery with at least five kilowatt hours of capacity, plus an additional $417 for each kilowatt hour of battery capacity in excess of five kilowatt hours. Credit amounts for a single vehicle are capped at $7,500. This full amount can be claimed until the second quarter after the vehicle’s manufacturer sells its 200,000th qualified vehicle and will also phase out each quarter over a one-year period. Vehicles will not be eligible for a credit if acquired after the phase-out period. For example, Tesla, a popular electric motor vehicle manufacturer, currently has vehicles in its lineup that qualify for tax credits. If a qualifying Tesla vehicle was purchased between 1/1/2019 and 6/30/2019, the owner of the car can receive a credit of at least $3,750; for vehicles purchased 7/1/2019 through 12/31/2019, the owners can receive at least $1,875.

A full list of qualifying vehicle brands, models and conditions can be found on the IRS website.

The state of Pennsylvania also offers an Alternative Fuel Vehicle (AFV) Rebate for PA residents. The most recent program guidelines became available on July 1, 2019 and offer rebates of up to $1,500 for new hydrogen fuel cell vehicles and battery electric vehicles, with rebates of up to $1,000 for original equipment manufacturers or certified retrofit natural gas vehicles. The guidelines also offer a $1,000 rebate for propane vehicles, plug-in hybrid electric vehicles and electric motorcycles, although there were slightly higher rebate amounts for the first six months of 2019.

In order to qualify for a rebate on an AFV, a completed rebate application form, available on the PA Department of Environmental Protection’s website, must be filled out and submitted no later than six months after the vehicle’s purchase date. All applications must include the following information: Social Security numbers of the PA resident, a valid PA vehicle registration, and proof of purchase or a copy of signed lease. Any application that is missing information will not be accepted. 

For more information, please contact a member of the Schneider Downs Transportation and Logistics Team listed below to discuss your options and eligibility:

•           Dan Phillips – Shareholder (412) 697-5299

•           Mike Renzelman – Shareholder (614) 586-7203

•           Jim Gilboy – Senior Manager (412) 697-5249

•           Matthew Werner – Senior Manager (412) 697-5403

•           Danielle Miceli – Manager (412)-697-5373