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2012 Hybrid & Electric Car Tax Credit Update

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Tesla Model SMany many years ago in a Congress far far away a law was passed that offered tax credits for the purchase of hybrid cards and light trucks. The law was the Energy Act of 2005, the Congress was the 109th, and President Bush was the one who signed it. It created a tax credit of up to $3,400 for qualifying vehicles but the credit expired when 2010 came to a close.

What took its place was a new tax credit on electric vehicles created by the American Recovery and Reinvestment Act of 2009. Electric vehicles purchased in or after 2010 is eligible for up to $7500 in tax credits.

Here’s what the two associated sections say:

Plug-in Electric Drive Vehicle Credit (Section 1141): The new law modifies the credit for qualified plug-in electric drive vehicles purchased after Dec. 31, 2009. To qualify, vehicles must be newly purchased, have four or more wheels, have a gross vehicle weight rating of less than 14,000 pounds, and draw propulsion using a battery with at least four kilowatt hours that can be recharged from an external source of electricity. The minimum amount of the credit for qualified plug-in electric drive vehicles is $2,500 and the credit tops out at $7,500, depending on the battery capacity. The full amount of the credit will be reduced with respect to a manufacturer’s vehicles after the manufacturer has sold at least 200,000 vehicles.

Plug-In Electric Vehicle Credit (Section 1142): The new law also creates a special tax credit for two types of plug-in vehicles — certain low-speed electric vehicles and two- or three-wheeled vehicles. The amount of the credit is 10 percent of the cost of the vehicle, up to a maximum credit of $2,500 for purchases made after Feb. 17, 2009, and before Jan. 1, 2012. To qualify, a vehicle must be either a low speed vehicle propelled by an electric motor that draws electricity from a battery with a capacity of 4 kilowatt hours or more or be a two- or three-wheeled vehicle propelled by an electric motor that draws electricity from a battery with the capacity of 2.5 kilowatt hours. A taxpayer may not claim this credit if the plug-in electric drive vehicle credit is allowable.

Depending on the size of the battery capacity, your credit is anywhere from $2,500 to $7,500. According to the current list at FuelEconomy.gov, all eligible vehicles are still eligible for 100% of the credit. No manufacturer has sold at least 200,000 vehicles.

Here are the eligible vehicles:

  • 2010 CODA Sedan (CODA Automotive)
  • 2010 E36 78 Passenger Wagon
  • 2010 E36t Pick-up Truck
  • 2010 E36v Utility Van
  • 2011-2012 Transit Connect EV (Ford/Azure Dynamics)
  • 2012 i-MiEV (Mitsubishi)
  • 2011 Leaf (Nissan)
  • 2011 fortwo electric vehicle (smart USA)
  • 2008-11 Roadster (Tesla)
  • 2011 Think City EV (Think)
  • 2011 LiFe (Wheego)

I haven’t even heard of half the manufacturers on that list (CODA? Think? Wheego?) so it’s no surprise they haven’t sold 200,000 (that’s a lot of vehicles… the hybrid credit started its phase out at just 60,000 cars.

(Photo: jurvetson)

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6 Responses to “2012 Hybrid & Electric Car Tax Credit Update”

  1. jerry says:

    Well, don’t forget that the same credit applies to plugin hybrid vehicles, like the well-known Chevrolet Volt :)

  2. Strebkr says:

    Every dealership is supposed to have a demo volt to take people for test drives in. Its partly to drum up business for the car but its also part PR to get people to just try it out once. I need to do it sometime.

  3. MARTHA says:

    Yes, But don’t forget the cost of the cars (leaf) $37,000.00 you pay up-front and at end of year you owe 2300.00 in taxes you lose the rest of the credit.

    KEEP THAT IN MIND….

  4. Anonymous says:

    I just bought an honda hybrid that doesn’t plug in….guess this car doesn’t qualify eh???

  5. Jane says:

    Do any fuel-efficient vehicles qualify for a tax credit or deduction?


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