Electric Car Tax Credit California


California Has An Electric Car Rebate Problem

Automakers Push For Amendments To EV Tax Credit Proposal

Many car shoppers are aware that the federal government provides a tax rebate of up to $7,500 on the purchase of a new electric car. Fewer know that many states will also help you buy a new electric vehicle .

But many states do exactly that. Alabama offers lower electricity rates for EV owners. Washington offers sales tax breaks and assistance with installing a home charger. And many states between them offer everything from reduced electric bills to cash in the mail.

California is the most aggressive state in helping its residents go electric. On paper. But those rebates are proving hard to get.

Good Luck Getting A State Rebate On Your New Electric Car

Californias electric car rebate program is designed to steer consumers toward clean, environmentally friendly vehicles. Unfortunately for buyers, its confusing, unpredictable and underfunded.

The legislation doesnt specify which vehicle brands and models meet all of the tax credit eligibility criteria but the U.S. Department of Energy recently that lists the 2022 and 2023 model vehicles that at least meet the qualification of being built in North America. Those vehicles include the Chevy Bolt, the Nissan Leaf, the Ford Mustang Mach-E and the Tesla Model 3 and Model Y.

The vehicles that dont qualify for the new tax credit because they are either too pricey or are not assembled in the U.S. include the Hummer EV, the BMW i4, Hyundai Ioniq 5, Kia EV6 and Toyota bZ4X, according to Consumer Reports.

Can Californians get both the state rebate and the federal tax credit?

Yes, if you can get your hands on a rebate. Californias Clean Vehicle Rebate Program which offers as much as $7,000 in rebates to buy or lease a new plug-in hybrid electric vehicle, battery electric vehicle, or a fuel-cell electric vehicle can be coupled with the federal tax credit.

For the record:

1:56 p.m. Aug. 17, 2022A previous version of this story said that the California Clean Vehicle Rebate Program has no income limits for applicants. It does. Single filers who earn $135,000 or more per year and joint filers who earn $200,000 or more do not qualify for a rebate.

Establishment Of Zero Emission Vehicle And Near

The California Air Resources Board will establish the Zero Emission Assurance Project to offer rebates for the replacement of a battery, fuel cell, or other related vehicle component for eligible used ZEVs and near-ZEVs. Rebates will be limited to one per vehicle. By January 1, 2024, CARB must publish a report to the legislature detailing the number of rebates awarded, the emissions benefits of the ZAP, and the impacts of the ZAP on low-income consumer decisions to purchase zero and near-zero emissions vehicles. A ZEV is defined as a vehicle that produces no criteria pollutant, toxic air contaminant, or greenhouse gas emissions when stationary or operating. A near-ZEV is a vehicle that uses zero emission technologies, uses technologies that provide a pathway to zero emission operations, or incorporates other technologies that significantly reduce vehicle emissions. Rebates will be available through July 31, 2025.

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Commercial Electric Vehicle Rebate

The Los Angeles Department of Water and Power provides rebates to commercial customers toward the purchase of Level 2 or direct current fast charging stations. Commercial customers who purchase and install EV charging stations for employee and public use can receive up to $5,000 for each Level 2 EV charging station with up to $500 in additional rebate funds per extra charge port. Commercial customers may also receive up to $75,000 per DCFC stations, and up to $125,000 per DCFC station for medium- and heavy-duty vehicle use. Maximum rebate amounts will vary based on whether the EV charging stations are located in a disadvantaged community. Eligible customers may qualify for up to 40 rebate awards depending on the number of parking spaces at the installation site. EV charging stations must be installed within the LADWP service area. Rebates are available on a first-come, first-served basis. For more information, including program guidelines and application materials, see the Charge Up L.A.! website.

Ethanol And Renewable Diesel Volume Rebate Program

List Of Hybrid Cars Eligible For Tax Credit

Propel Fuels offers a rebate to qualified fleet customers for monthly purchases of more than 500 gallons of E85 and renewable diesel. Fleet customers must purchase the fuel directly from Propel public retail locations using the Propel CleanDrive Fleet Card. The program offers a rebate of $0.03 to $0.05 per gallon. The rebate is applied at the end of each monthly billing cycle. For more information, see the Propel Clean Fleet Solution website.

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When Will The Ev Credit Extension Be Available

With the bill now passed, the details and criteria around the credit will need to be finalized by the Department of Transportation, which the Secretary being the final approver.

The guidelines will then need to be reviewed and implemented by EV manufacturers and dealers, including determining which vehicles are eligible given the new focus on domestic assembly and manufacturing in the bill.

The bill specifically states that final guidelines around this EV credit have to be issued by December 31, 2022. This will mean that the credit wont be available till 2023 and beyond.

So dont rush out and buy your EV in the near term based solely on getting this credit. It is also likely that no near term changes will result at manufacturers and dealers as a result of this bill, since final guidelines wont be in place until next year.

What Is The Electric Vehicle Tax Credit

The EV tax credit is a federal incentive designed to encourage people to purchase EVs. Residents who meet the income requirementsand who buy a vehicle that satisfies the price, battery, and assembly restrictionsare eligible to receive up to $7,500 from the government in the form of a tax credit.

This incentive has been around in various guises for years, as politicians have scrambled to tackle pollution and promote the use of cleaner energy. Its latest version, signed into law with the Inflation Reduction Act, carries some important changes that will begin kicking in from the start of 2023 until the end of 2032.

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Other Ev Incentives In California

There are many EV incentives in California beyond the EV rebate.

Beyond the rebate, there are other statewide, local and utility incentives.

Some of the statewide EV incentive highlights in California:

  • High Occupancy Vehicle and High Occupancy Toll Lane Exemption

  • You can get a Clean Air Vehicle sticker. You can then use HOV lanes regardless of the number of occupants in the vehicle. Your vehicle is also then eligible for reduced rates or exemptions from toll charges for HOT lanes.

  • Small businesses in California can get incentives to help with the design, development, purchase, and installation of EVSE.

  • Its a great idea to encourage businesses you frequent or your workplace to look into this program so you can charge your EV while there.

How To Get A California Electric Car Rebate

Will Americans make use of new electric vehicle tax credit?

Clean Vehicle Rebate Program

California residents who purchase or lease a new battery, plug-in hybrid, or fuel cell electric vehicle may be eligible for a rebate of up to $7,000. This program is limited to eligible vehicles and only applies to consumers under the specified income threshold . In addition, consumers must apply for this rebate within three months of their purchase or lease in order to qualifythough eligibility alone does not automatically mean you will receive funds.

This California EV rebate typically awards between $1,000 and $3,500 for plug-in hybrids $2,000 to $4,500 for battery electric vehicles and $4,500 to $7,000 for fuel cell electric vehicles. Funds for this program may become exhausted before the fiscal year ends, but applicants will be placed on a rebate waiting list in this case.

PG& Es Clean Fuel Rebate

PG& E customers who are also EV owners are eligible for a rebate of up to $800 for helping the future run on cleaner energy. This rebate is part of a California program named the Low Carbon Fuel Standard, whose goal is to reduce transportations greenhouse gas emissions. While customers can use this electric car rebate however they see fit, it typically covers one and a half years worth of electricity to power your vehicle, and it can be used to help cover the installation costs of an electric vehicle charging station in your home.

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Do The Electric Car Tax Credits Expire

The government has already begun to phase out electric vehicle tax credits. This is because sales volume is increasing, and they were introduced to encourage this industry.

Theres no set date for when electric vehicle tax credits are due to expire. It depends on the manufacturer. This arises when a manufacturer sells 200,000 qualifying vehicles. Tesla was the first manufacturer to reach this limit back in July 2018.

Thats why from January 1st to June 30th, 2019, the tax credit has decreased by $3,750. From July 1st until the end of the year, the credit is only worth $1,875. From 2020, you wont be able to claim tax credits on a Tesla.

General Motors became the second manufacturer to hit this milestone in the final financial quarter of 2018. From April 2019, qualifying vehicles are only worth $3,750 in tax credits. Then, from October 2019 to March 2020, the credit drops to $1,875. After that, the credit phases out completely.

Nissan is expected to be the third manufacturer to hit the limit, but as of this writing, its still 70,000 sales away from this. However, analysts expect sales to pick up soon.

New Federal Tax Credits Under The Inflation Reduction Act

  • Federal tax credit for EVs will remain at $7,500
  • Timeline to qualify is extended a decade from January 2023 to December 2032
  • Tax credit cap for automakers after they hit 200,000 EVs sold is eliminated, making GM, Tesla and Toyota once again eligible
  • The language in the bill indicates that the tax credit would be implemented at the point of sale instead of on taxes at the end of the fiscal year
  • That means you can get your credit up front at the dealer, but these terms may not kick in until 2024
  • In order to get the full credit, the EV must be assembled in North America and
    • The majority of battery components need to come from North America and
    • A certain percentage of critical minerals must come form North America or countries with free trade agreements with the US
  • New federal tax credit of $4,000 for used EVs priced below $25k
  • Subject to other requirements like lower annual income
  • Revised credit applies to BEV cars with an MSRP below $55k
  • Also includes zero-emission vans, SUVs, and trucks with MSRPs up to $80,000
  • New credit also expands to commercial fleet customers
  • Includes separate qualifications and limits
  • The federal EV tax credit will be available to individuals reporting adjusted gross incomes of $150,000 or less, or $300,000 for joint filers
  • The new credit will also continue to apply to Plug-in Hybrid EVs as long as they meet the same requirements outlined above and are equipped with a battery over 7 kWh.
  • Revamped Credit for new BEV/PHEVs

  • One credit per vehicle.
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    Electric Vehicle Charging Station Incentive Program Support

    The California Electric Vehicle Infrastructure Project , funded by the California Energy Commission, provides guidance and funding for property owners to develop and implement EV charging station incentive programs that help meet regional needs for Level 2 and direct current fast charging stations. Level 2 EV charging stations must be ENERGY STAR certified. CALeVIP evaluates proposed EV charging station incentive programs and solicits input from stakeholders to guide the development and implementation of the programs. CALeVIP also provides the incentive funding for each program. For more information, see the CALeVIP website.

    The Biden Administration Continues To Expand Ev Adoption

    Free Market Coalition to Congress: No Electric Vehicle Tax Credit ...

    President Biden first vowed to make the nations entire federal fleet all-electric. The White House has introduced two bills to expand EV adoption, one of which was signed by the President and includes funding for heavily expanded EV charging infrastructure.

    Previously, there were rumors that the federal tax credit would be increased to $10,000. In President Bidens previous $174 billion investment plan for electrification, the tax credit was quickly mentioned as a reform. However, the summary remained vague about the reform only confirming that it will not only take the form of tax rebates but also point of sale rebates and it will now be for American-made EVs.

    The second and larger bill sat within Bidens Build Back Better Act and subsequent increases to the federal tax credit, but it couldnt get past the Senate in late 2021. At that point, the revamped tax credit we all have sought was in limbo, possibly DOA. Until this past summer

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    What Happens To The Tax Credit That Existed Before The Inflation Reduction Act

    The Internal Revenue Service has provided some preliminary guidelines regarding the EV tax credit and its immediate future.

    The previous $7,500 tax credit, which did not have limitations on income, price or battery component sourcing, will still be in effect until December 31, 2022. However, now that the Inflation Reduction Act has been signed into law, the North American “final assembly” requirement will immediately apply. This will greatly reduce the pool of vehicles to choose from until automakers start to locate more of their supply chains and factories within North America, which could take a few years.

    Qualifications For The Federal Ev Tax Credit

    There are some specifications for which vehicles meet the criteria for the federal tax credit. For a vehicle to be eligible for the federal government, it must:

    • Be a road-going vehicle.
    • Be purchased. If you lease a vehicle, you cannot qualify for the federal EV tax credit.
    • Charge from an external source.
    • Contain a battery pack with a capacity of 4 KW hours or more.
    • Be 100% battery-electric or have a plug-in hybrid power chain.
    • Purchased as a new car from a factory with electrified powertrains.
    • Be intended for use on US roads.
    • Not be ethanol, diesel, or fuel-cell.

    Mass-produced full-electric vehicles sold in the US qualify for the entire $7,500 tax credit. However, Tesla and General Motors already exceeded the sales volume cap of the federal program, so you will not be able to get the entire federal credit.

    As for plug-in hybrids, most qualify for a federal tax credit between $3,500 and $6,300. However, a few qualify for the full federal EV tax credit, including:

    • 2020 and 2021 Toyota Rav4 Prime
    • 2020 Chrysler Pacifica Hybrid
    • 2020 Honda Clarity PHEV

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    How To Claim The Ev Federal Tax Credit

    Since it is a tax credit, you do not get it immediately upon purchasing the EV. You apply for the EV federal tax credit when you file your taxes for the year you purchased the vehicle. If you purchased a new EV in May of 2021, you would apply for the tax credit when you file your 2021 taxes at the beginning of 2022.

    You must fill out IRS Form 8936 when filing your annual income tax returns. Keep in mind that not all online or software-based tax systems support this form.

    Perks Of Driving An Ev

    Electric vehicle makers say most cars won’t qualify for federal tax credit
    • Discounted Utility Rates – PG& E offers an EV rate for home charging. Find the best EV rate for you here.
    • HOV Carpool Benefits – You can drive your qualifying electric car in the carpool lane anytime with a Clean Air Vehicle Sticker.
    • Fuel Savings – Driving an electric car could save you money every time you travel. Compared to traditional gas cars, EVs are cheaper to run and far more efficient to drive. Check for public charging using apps or online maps, such as Plugshare.com.
    • Cheaper to Maintain – While the price of an EV may be similar to most comparable gas-powered vehicles, the cost of running one is significantly cheaper, particularly over the full lifetime of the vehicle. EVs are designed to be as efficient as possible, which means you’ll rarely have to have your EV serviced and the running and repair costs are minimal. This electric car overview goes into depth on the various benefits for the different electric car types.
    • Better for the Environment – Fully electric cars have zero tailpipe emissions making them greener, cleaner, and better for the environment than gas or diesel cars. Less emissions mean reduced greenhouse gasses, enabling San Francisco to move towards net-zero emissions by 2050.

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    How To Find Ev Incentives In Ca For Your Zip Code

    Beyond the statewide EV incentives, you might be able to find some local or utility EV incentives as well. These can include more rebates such as:

    • Customers of Southern California Edison , the main electricity supply company for most of Southern California, can apply for up to a $1000 rebate with the Clean Fuel Reward Program if they purchase or lease an EV.

    • Through the Peninsula Clean Energy DriveForward Electric Program income-qualifying San Mateo County residents could be eligible for an inventive of up to $4,000 for purchasing a used electric vehicle.

    • There is also a $1,000 additional discount at select dealerships if you live in San Mateo County.

    • Discounted tolls, special loans, low-cost home charging rates, etc.

    Simply enter your zip code here:

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