Government Incentives to Buy Electric Vehicles
If you’re thinking about buying an electric vehicle to help fight global warming, you’ll be happy to know that our government is ready to help you pay for it, as well they should. The federal government offers a tax credit of up to $7,500, and the state of California is anxious to kick in another $2,000. Let’s say you have your heart set on that sweet electric Mini Cooper coming to dealerships in March. Who could blame you? You could see the price drop from $29,900 to $20,400 just by filling out some paperwork. But be warned. Both the federal tax credit and the state rebate come with fine print. Here’s the deal.
First, not all EVs are eligible for the federal tax credit. The intent of the legislation was to help automakers get up to speed bringing EVs to the U.S. market, but the funds are not meant to last forever. After an automaker has sold 200,000 qualified vehicles, the tax incentives for their cars start to decrease and eventually shrink to zero. Tesla was the first to reach 200,000.You no longer get any money from Uncle Sam when you buy a Tesla. They aren’t all that concerned because they build fantastic EVs. Many consumers will happily kiss off the $7,500 and buy the Tesla anyway. Their cars are that good. General Motors has also hit the 200,000 mark and is nearing the end of the phase out period. You can still get $1,875 back on the Chevrolet Bolt, another great EV, but you only have until the end of March. All the other EVs on the market are eligible for the full $7,500 until we hear otherwise.
The other thing you need to know is that not all taxpayers are eligible for the entire tax credit. To hit the jackpot, you have to have at least $7,500 of tax liability. Your tax liability is what you owe Uncle Sam before you adjust your tax return to account for withholding. Let’s say you only owe $3,000 in federal taxes. That’s the most you’re going to get to help you pay for your cool new EV. It truly is a bummer. If you make a lot of money and pay enough in taxes, the feds will give you $7,500. If you’re just getting by and don’t pay as much in taxes, you don’t get as much help. The EV credit will wipe out whatever tax you do owe, and the money you had withheld will be your tax refund. If you’re not going to get much of a tax credit anyway, be sure to test-drive a Tesla and a Bolt. If you plan to lease the vehicle, the dealership gets the tax credit and will usually pass the savings on to you.
The $2,000 rebate from the state of California is better for the little guy. If you’re bummed about the federal tax credit rules, you’ll be happy to know that California doesn’t give rebates for cars that cost over sixty grand. Fat cats will miss out if they buy a luxury EV. You might also smile when you learn that taxpayers with high gross annual incomes aren’t entitled to the state rebate no matter what EV they buy. The limit is $150,000 for single filers, $204,000 for a headof-household, and $300,000 for joint filers. If you have a low income, 300% of the federal poverty level or less, you’ll get a bonus $2,500 on top of the standard $2,000 rebate! For a single individual living in the Golden State, 300% is an annual income of $38,280. For a family of four it’s $78,600.The money gets doled out through the California Clean Vehicle Rebate
Project. The rebates are only available as long as their funding holds out, but they’ve got over 35 million bucks in their coffer right now. That should hold out for a while. Be sure to get every penny that you’re entitled to.
If anybody gives you a hard time about using taxpayer dollars to help you buy your EV, be sure to remind them about the twenty billion dollars in subsidies we shell out to the fossil fuel industries each year. Our government doesn’t do much to help stop climate change, but their EV incentives are making an important difference. It only works when people buy EVs. Get yourself a good one.