2012 Electric Car and Plug-In Hybrid Tax Credit
If you've recently bought an electric car, or a plug-in hybrid, when it comes to filing your income tax return, you may have some lingering questions regarding either the Electric Car Tax Credit or the Plug-in Hybrid Tax Credit. The Energy Improvement and Extension Act of 2008, and the American Clean Energy and Security Act of 2009(ACES) established tax credits for new qualified plug-in electric and plug-in hybrid motor vehicles. If you've recently leased or purchased an electric vehicle or a plug-in hybrid , chances are you will qualify for either the tax credit for electric cars or the tax credit for plug-in hybrid cars.
The key words in that last paragraph are “new” and “qualified."
New, as the word implies, means the individual claiming the Electric Car Tax Credit or Plug-in Hybrid Tax Credit must be the original purchaser of the automobile. There was some controversy last year when some Chevrolet Volt dealers were accused of selling used Volt models and neglecting to inform buyers they would not qualify for the $7500 plu-in hybrid tax credit that the Volt carried, as they were not the original purchasers of the car.
Whether dealers actually did this or not isn’t really the point here. The point here is that to qualify for the Electric Car Tax Credit or the Plug-in Hybrid Tax Credit you must be the original purchaser of the car. Buying a used electric car or a used plug-in hybrid did not qualify you for the tax credit.
The tax credit programs for these cars exists because, as with any new technology, early adopters are always going to pay a premium to get access to the technology. Given the perceived benefits to the environment of getting as many of these cars on the road as quickly as possible, the electric car tax credit is intended to help consumers offset the cost of being one of the first to buy a qualified electric or plug-in hybrid car.
Which brings us to the key word “qualified." The tax credits will phase out as certain sales targets are reached. This was set into place under the assumption costs of production decrease as sales volumes increase. With more sales, the resulting achievement of the economies of scale brought about by necessitating larger production runs theoretically enables manufacturers to sell the cars for less—thus eventually mitigating the need for government subsidies.
In fact, for this very reason, the federal tax credits for clean diesels and conventional hybrids all expired on December 31, 2010. If you didn’t file for your hybrid or diesel car tax credit with your 2011 tax return, you’re pretty much out of luck in that regard. However, if you purchased one of the qualifying electric vehicles in 2011 or will do so in 2012, you’ll want to read on to make sure you can take full advantage of the electric car tax credit or plug-in hybrid tax credit on your 2012 or 2013 IRS tax returns.
A Quick Trip To Electric Car Tax Credit Caveat City…
The plug-in hybrid and electric car tax credit is a government program, so quite naturally there are caveats.
1. If you bought the car with the intention to resell it, you won’t qualify for the tax credit. Otherwise, all of the electric car and plug-in hybrid tax credits would go to dealers, since they do buy cars—from the manufacturer—to sell to the general public.
2. Leasing companies can apply for the credit, since they actually own the cars and lease them to their customers. More often than not though, leasing companies do forward the tax credit on to the Lessee—usually in the form of a credit toward the capital reduction cost (basically, the down payment on a lease). (This will come into play later, read on…)
2. If you apply for the electric car tax credit or plug-in hybrid tax credit, you must be using the qualifying vehicle primarily in the United States. Buying it in the U.S. and living with it in Canada, Mexico, or any other country—even if you’re a U.S. citizen—won’t play.
3. Not every electric vehicle qualifies for the full $7,500 credit. There are other certain parameters the vehicle must meet as well. (See the IRS listing below.) Further, only electric vehicles with battery packs rated for at least four kilowatt-hours of energy storage, which are capable of being recharged from an external source, qualify for the electric car tax credit. In other words, conventional hybrids need not apply either; the car must be capable of being recharged from an electrical outlet of some kind.
4. Assuming your electric car or plug-in hybrid meets all of the technical requirements to qualify for the full $7,500 credit, you must also have purchased a qualifying vehicle produced by one of the qualified manufacturers listed at the FuelEconomy.Gov Website.
5. The tax credit for each individual electric vehicle or plug-in hybrid phases out as soon as its manufacturer sells 200,000 units of it.
6. It is important to note the tax credit will not, under any circumstances, exceed your tax liability. This means you can’t use the credit to generate a tax refund. In other words, if after preparing your taxes, you find you owe the government $7,500, and you bought a suitably qualifying vehicle in 2011, you’re in luck; your tax bill will be reduced to zero.
However, if you owe say, $2,500, that $2,500 will be the total amount of your tax credit and your tax bill will be reduced to zero. The government isn’t going to then turn around and refund you the other $5,000. Similarly, if you owe no taxes at all, you won’t get the electric car tax credit, nor will you be permitted to roll it, (or as in the scenario above, the $5,000 “balance”) into your potential 2012 tax liability.
However, if you’re a person who typically qualifies for a refund, there is a nice little loophole you could slip through. You could still technically take advantage of the $7,500 credit by leasing a fully qualifying electric or plug-in hybrid vehicle instead of buying it. Remember, most leasing companies automatically apply the credit toward the capital reduction payment required to establish the lease. This strategy enables you to get the benefit of the electric car tax credit, regardless of your potential tax liability.
State And Regional Electric Car Tax Credit Incentives
Pretty much everything else you’ll find on the ‘Net focuses on the Federal tax credit for electric cars, but we’re here to tell you there are a host of breaks and incentives offered by the various states available to you too.
California, for example, always at the forefront of emissions standards, offers a hefty $2,500 cash rebate for a qualifying electric vehicle purchase. There are also rebates and credits available for the purchase of the charging stations you’ll need to keep your EV powered up.
Many of the states, in addition to straight out rebates and credits, offer other enticements in the form of reduced registration fees, free parking, lower use taxes, and/or access to high occupancy vehicle (carpool) lanes. You’ll find a full listing of the state-by-state incentives available to you listed at the U.S. Department of Energy’s Website: http://www.afdc.energy.gov/afdc/laws/matrix/incentive
Qualifying 2012 Electric Car Tax Credit Vehicles
Internal Revenue Code Section 30D provides a credit for Qualified Plug-in Electric Drive Motor Vehicles including passenger vehicles and light trucks. For vehicles acquired after 12/31/2009, the electric car tax credit is equal to $2,500 plus, for a vehicle, which draws propulsion energy from a battery with at least five kilowatt-hours of capacity, $417, plus an additional $417 for each kilowatt-hour of battery capacity in excess of five kilowatt-hours. The total amount of the credit allowed for a vehicle is limited to $7,500.
Autobytel's Picks for 2012 Electric And Plug-in Hybrid Car Tax Credits:
As if the government providing monetary incentives in the form of an electric car tax credit, or a plug-in hybrid tax credit for "doing the right thing" isn't enough, the really good news here is "electric" or "plug-in hybrid" doesn't mean boring anymore. Our picks range from a full-on sports car to a brace of gorgeous luxury sedans, intriguing family cars, and of course, the expected quirky-cute micro-cars that'll leave everyone smiling in your path as you go about your day-to-day activities.
Whether your interest lies with plug-in hybrids or full-on electric cars, the marketplace has evolved past the science experiment stage and now firmly resides in the realm of practicability. The best news of all is this is just the beginning. Manufacturers like Porsche, BMW, Mercedes-Benz, and Ferrari have all shown electric and plug-in hybrid concepts, meaning full production cars from these esteemed manufacturers are definitely on the way.
Providing as they do enhanced performance, better fuel economy, demonstrated reliability, and reduced emissions, we can very clearly envision a day when plug-in hybrid vehicles and electric vehicles will be the norm—rather than exceptions. Of course, by then, the electric car and plug-in hybrid tax incentives will have phased out. Your best bet, take a look at our list of favorites and make your selection today!
Chevrolet's Volt, in many ways can be said to be the one that really started it all—as far as plug-in hybrids go.
While there were hybrids before the Volt, the Chevrolet was the first mass-produced plug-in hybrid electric car. We designate it as such because it falls into kind of a nether region between electric cars and hybrids. While it's true the Volt has a gasoline-fired engine beneath its hood, that engine serves as a generator.
In much the same way as the diesel engine in a locomotive generates electricity to power the locomotive's electric motors, the gasoline engine in the Volt generates electricity to run the Volt's electric motor. Capable of traveling up to 35 miles on electricity alone, when the batteries are depleted, the Chevrolet Volt uses its gasoline engine to produce electric power to keep going.
Tesla Model S
The Tesla Model S is the long awaited second model from Tesla, the company that set the world on notice that it was possible to build an interesting electric car. Some say Tesla's Roadster was the catalyst that prompted GM to get on the stick and come up with the Volt. Whether this is true or not, we're just glad Tesla exists.
The company's next project, the Tesla Model S, is a full-size four-seat battey electric luxury family sedan. Deliveries are expected to begin in July 2012, qualifying the car for the 2012 Electric Vehicle Tax Credit. With an estimated 362 horsepower and 306 ft-lbs of torque available to it, the Model S should be a very exciting car to drive. Even with its 4,150 pound curb weight the Tesla sedan's 0-to-60 time is pegged at 5.6 seconds.
Designed to play solidly in the luxury-sport sedan segment, the Tesla Model S is good-looking in a Jaguar-ish sort of way. It's also nicely equipped, and if the prototypes we've seen are any indication, very nicely finished too.
Pricing is expected to start at $57,400.
The Fisker Karma, like Chevrolet's Volt, uses its gasoline-fired 260-horsepower internal combustion engine to generate electricity to power its two electric motors. Unlike the Volt however, the Karma is aimed solidly at the high end of the automotive marketplace. The $7,500 electric car tax incentive, while certainly welcome, isn't going to do a whole lot to make the Karma more affordable to the average motorist.
With an esimated base price of $102,000, the Fisker Karma is a luxury sports sedan in every sense of the phrase. Its interior, in addition to being graced with the most fluid collection of elliptical lines ever applied to a modern automobile, is wrapped in an amazing amalgam of high-end textiles, along with woods rescued from California wildfires and artificial suede. Capable of seating four in supreme comfort, the Fisker Karma is estimated to return the equivalent of 85 miles per gallon.
Decause of all of this, owning and driving the Fisker promises to be more than just good Karma—there are hedonistic levels of pleasure to be had behind its wheel as well.
The Mitsubishi i - also known as the Mitsubishi i-MiEV, is a five-door hatchback produced by Mitsubishi Motors. The electric car has an EPA rated range of 98 miles and has been on sale in Japan since 2009.
The Mitsubishi uses a single permanent magnet synchronous motor mounted on its rear axle and a 16 kW-hour lithium-ion battery pack containing 88 cells. Mitsubishi says the car is good for a top speed of 80 miles per hour.
With a base price of $27,990—plus $850 in destination charges, the $7,500 electric car tax incentive the Mitsubishi qualifies for does quite a bit to make the car more affordable. However you have to make sure you're ready for Mitsubishi i ownership. A micro-car, the dimuntive EV seats four, but it's tight—very tight.
On sale now (as of March, 2012), initial availability is limited to California, Hawaii, Oregon, and Washington—to be followed shortly thereafter by the Northeastern states.
If the Tesla Roadster can make the claim of beng the first contemporary mass-produced electric car, the Nissan Leaf can certainly make the claim of being the first mass-produced practical electric car.
Offering all of the amenities of a modern family car, the LEAF features both navigation and Bluetooth. Capable of seating five, a 0-60 time of around eight seconds, a top speed of 90 miles per hour, and traveling up to 100 miles on a full charge, Nissan's LEAF leap-frogged ahead of both Toyota's Prius and Chevrolet's Volt, bypassing the hybrid option altogether and going pure electric.
Qualifying for the full $7,500 electric car tax credit, Nissan's LEAF also garners a number of state electric vehicle tax incentives, which combined, can bring the price of the LEAF down well into the $20,000 range.
Tesla's Roadster was the car that essentially awkened the industry to the feasibility of using lithium-ion batteries (just like ones in a laptop computer) to pwer an automobile. The first highway capable, serial production car to be offered in the United States, in addition to being environmentally friendly, the Roadster is fast.
Capable of going from 0-60 miles per hour in less than four seconds, the Tesla Roadster is also rated by the U.S. Environmental Protection Agency of being capable of traveling 244 miles on a single charge. Based on the Lotus Elise sports car, the Tesla Roadster leaves a bit to be desired in terms of ergonomics, but there is no denying the fun to drive aspect of the car.
That you get something like the Tesla Roadster and qualify for a tax credit for electric cars is nothing short of amazing. With the Tesla Roadster one can truly have their electric car and seriously drive it too.
Toyota Prius Plug-in Hybrid
The reigning king of hybrids, Toyota's Prius is the car everyone thinks of when they hear the word hybrid. And while the federal tax incentive for hybrid cars has phased out on the standard Prius, as well as its Prius C and V siblings, the plug-in hybrid tax credit for the Prius Plug-in is still in full effect.
Combining everything we love about the Prius with the ability to recharge its battery pack while sittting absolutely still, the Toyota Prius Plug-in makes everybody's favorite hybrid cleaner, endows it with even more range, and will travel at up to 62 miles per hour on electric power. In addition to the plug-in capability, this version of the prius differs from the others in its use of lithium-ion batteries.
Like the standard Prius models, equipment is generously lavished upon the model. Standard features include heated front seats, a remote air conditioning system, a charger timer, EV/ECO/POWER modes, a three-door capable smart key with push-button start, touch-screen display audio with navigation and an integrated backup camera, Toyota Entune, and LED daytime running lights.
The EPA says the Toyta Prius Plug-in should go 540 miles on a tank of regular unleaded fuel.
Smart Fortwo Electric Drive
Partially devleoped by Tesla Motors, the company behind the Tesla Roadster and the Tesla Model S, the Smart Fortwo Electric Drive is some three feet shorter than a MINI Cooper. Virtually indistiguishable visually from the standard Smart Fortwo, the Electric Drive Smart car packages its electric motor, single-speed trnasmision and battery pack, all in the space the 1.0-liter three-cylinder gasoline engine occupies in the standard car.
Smart says to expect a range of 84 miles, from its 16.5-kWh battery pack, which more than qualifies it for the entire $7,500 electric car tax credit. Top speed of the little car is 62 miles perhour, making it freeway capable—just. Iseally, the Smart Fortwo Electric Drive will be conscribed to urban runabout duty, making casual jaunts around crowded cities a breeze.
It's diminutive size makes it a breeze to park, and its roomy cabin makes it more than comfortable for the daily grind. Ironically, aside from the interior accomodations, the only this that isn't small about the Smart Fortwo Electric Drive car is its price.
Not for sale, Smart is leasing the cars at $599 a month for four years. Those of you adept with numbers have already surmised this totals up to $28,752. However, you can get the convertible for no extra charge. (Pun not intended...)
Ford Focus Electric
First shown atr the 2011 Consumer Electronics Show in Las Vegas, the 2012 Ford Focus Electric is the first all electric passenger car produced by Henry's company. Based on the all-new 2012 Ford Focus, the Electric Focus uses a 123-horsepower electric motor, capable of producing 181 ft-lbs of torque from rest. It's top speed is limited to 84 miles per hour.
A 23 kWh battery pack qualifies the Ford Focus Electric for the full $7,500 electric vehicle tax incentive, which effectively makes its price $32,445 before state electric vehicle tax credits, rebates and incentives are applied. Ford is claiming between 93 and 99 MPGe (miles per gallon equivalent) and a 70-mile range on a full charge. Recharge time is quoted between three and four hours on a 240-volt charger.
Intially offered in eleven cities, the Ford Focus Electric is currently (as of March, 2012) available in Atlanta; Austin and Houston, Texas; Boston; Chicago; Denver; Detroit; Los Angeles; San Francisco; San Diego; New York City; Orlando; Phoenix and Tucson, Arizona; Portland; Raleigh-Durham, North Carolina; Richmond, Virginia; Seattle; and Washington, D.C.
Other Qualifying Vehicles
For the full list of qualifying vehicles, go to the IRS website.
Please note; the information contained within this article is our interpretation of the rules and regulations governing the electric car tax credit and plug-in hybrid tax credit programs outlined herein. This article is in no way intended as—nor should it be construed as— expert tax advice, nor legal advice for that matter. Before basing any of your tax-related decisions on anything you’ve read here, consult your certified tax advisor for the absolute best information as it applies to your particular set of circumstances.