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2012 Hybrid & Electric Car Tax Credit Update

Posted By Jim On 01/10/2012 @ 7:06 am In Cars | 6 Comments

Many 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 [3], 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 [4] created by the American Recovery and Reinvestment Act of 2009 [5]. 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 [6], 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 [7])

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[2] Email: mailto:?subject=http://www.bargaineering.com/articles/2012-hybrid-electric-car-tax-credit-update.html

[3] Energy Act of 2005: http://www.afdc.energy.gov/afdc/laws/epact_2005

[4] tax credit on electric vehicles: http://www.irs.gov/irb/2009-30_IRB/ar07.html

[5] American Recovery and Reinvestment Act of 2009: http://www.irs.gov/newsroom/article/0,,id=206871,00.html

[6] FuelEconomy.gov: http://www.fueleconomy.gov/feg/taxevb.shtml

[7] jurvetson: http://www.flickr.com/photos/jurvetson/5123863760/sizes/l/in/photostream/

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