Federal Tax Credits for All-Electric and Plug-in Hybrid Vehicles

To be certified for the credit by the manufacturer, the vehicle must meet the following requirements:

• The vehicle must be made by a manufacturer (i.e., it doesn't include conventional vehicles converted to electric drive).
• It must be treated as a motor vehicle for purposes of title II of the Clean Air Act.
• It must have a gross vehicle weight rating (GVWR) of not more than 14,000 lbs.
• It must be propelled to a significant extent by an electric motor which draws electricity from a battery which
  • has a capacity of not less than 4 kilowatt hours and
  • is capable of being recharged from an external source of electricity.

The following requirements must also be met for a certified vehicle to qualify:

• The original use of the vehicle commences with the taxpayer—it must be a new vehicle.
• The vehicle is acquired for use or lease by the taxpayer, and not for resale. (The credit is only available to the original purchaser of a new, qualifying vehicle. If a qualifying vehicle is leased to a consumer, the leasing company may claim the credit.)
• The vehicle is used mostly in the United States.
• The vehicle must be placed in service by the taxpayer during or after the 2010 calendar year.

The credit begins to phase out for vehicles at the beginning of the second calendar quarter after the manufacturer has sold 200,000 eligible plug-in electric vehicles (i.e., plug-in hybrids and EVs) in the United States as counted from January 1, 2010. IRS will announce when a manufacturer exceeds this production figure and will announce the subsequent phase out schedule (Plug-In Electric Drive Motor Vehicle Credit Quarterly Sales).

Fill out Form 8936, Qualified Plug-in Electric Drive Motor Vehicle Credit.

For vehicles acquired for personal use, report the credit from Form 8936 on the appropriate line of your Form 1040, U.S. Individual Income Tax Return.

For vehicles purchased in 2010 or later, this credit can be used toward the alternative minimum tax (AMT).

If the qualifying vehicle is purchased for business use, the credit for the business use of an electric vehicle is reported on Form 3800, General Business Credit.

• Plug-In Electric Drive Vehicle Credit (IRC 30D)
• Notice 2009-89: New Qualified Plug-in Electric Drive Motor Vehicle Credit
• Notice 2009-54: Qualified Plug-in Electric Vehicle Credit
• Notice 2009-58: Qualified Plug-In Electric Vehicle Credit Under Section 30
• Energy Provisions of the American Recovery and Reinvestment Act of 2009