Last Updated August 18, 2021
Personal Tax Credit
Internal Revenue Service
Eligible Renewable/Other Technologies:
The federal government provides a tax credit for the purchase of a new all electric or plug-in hybrid electric vehicle. To qualify, the vehicle must be made by a manufacturer, have a gross vehicle weight rating of not more than 14,000 pounds, and be propelled to a significant extent by an electric motor which draws electricity from a battery which has a capacity of at least 4 kilowatt-hours (kWh) and is capable of being recharged from an external source.
The credit has a base value of $2,500, and an additional value based on the capacity of the battery. The capacity-based credit is $417 for each kWh of capacity in excess of 4 kWh, up to a combined maximum tax credit of $7,500. The credit will begin to be phased out for each manufacturer in the second quarter following the calendar quarter in which a minimum of 200,000 qualified vehicles have been sold by that manufacturer for use in the United States.