Internal Revenue Code Section 30D (IRC 30D) introduced a credit for Qualified Plug-in Electric Drive Motor Vehicles that includes passenger vehicles and light trucks. This credit is applicable for vehicles acquired after December 31, 2009 amounting to $2,500, plus $417 for vehicles which draw propulsion energy from a battery with at least 5 kilowatt hours of capacity, with an additional $417 credit for each kilowatt hour of battery capacity greater than 5 kilowatt hours. This credit has a limit, however, to $7,500 per vehicle. It can be used for either full electric or plug-in hybrid vehicles. The credit begins to phase out for a manufacturer’s qualifying vehicles once that manufacturer hits a certain sales threshold of at least 200,000 vehicles sold in the United States (GM and Tesla are not eligible for credits due to their sales).
Additionally, the installation of a charging station is eligible for a property tax credit of 30% of the cost of installation. A tax credit of up to $1,000 will be credited for residential installations and up to $30,000 for business or investment use property. Business property must first be reduced by any Section 179 deduction taken for the property. It is important to note that these tax credits are not refundable, so you need to have a tax liability of at least the amount of the credit to receive the full benefit.
Pennsylvania Tax Incentives
Pennsylvania is offering rebates to residents and providing grant opportunities to businesses, nonprofit organizations and government agencies through the Alternative Fuels Incentive Grant Program. Pennsylvania residents can apply for a rebate within six months of purchasing an electric vehicle for under $50,000. Rebate recipients will receive $750 for electric vehicles and $500 for plug-in hybrid vehicles. Both incentives require you to submit an application, which can be found through the provided links. The Pennsylvania Department of Environmental Protection also offers a program called Driving PA Forward, which provides funding for organizations and businesses around the state who are installing Level 2 electric vehicle charging stations. Up to $4,000 per plug is available, but it is important to note that all projects must be approved in advance by the Department.
Maryland Tax Incentives
Maryland joined seven other states in forming a task force to ensure the successful implementation of the Zero Emission Vehicles Program. The Maryland Energy Administration offers numerous incentives, including a rebate of 40% of the cost of charging stations; up to $700 for individuals, $4,000 for businesses and $5,000 for retail service locations. Maryland also has an incentive that allows electric vehicles to use high-occupancy vehicle (HOV) lanes, no matter how many passengers are in the car. Most, if not all, of the utility companies in Maryland offer a $300 rebate towards the purchase of a qualifying Level 2 charger that allows for time of use data sharing with the utility. The utilities will then credit your bill for charging your vehicle in the evening when the demand on the power grid is lower. Energy corporations such as Potomac Edison and BG&E are offering similar programs to make electric vehicle adoption more accessible to Maryland residents through enhanced public charging networks, as well as residential and multifamily incentives.
To search for incentives in your state, visit https://pluginamerica.org/why-go-plug-in/state-federal-incentives/
The BSSF Auto Dealers Practice can assist auto and truck dealerships with identifying the federal and state tax incentives for which they qualify. Contact us today to learn more!
About the Author
Cami L. Grimm, CPA, is a Manager at Brown Schultz Sheridan & Fritz (BSSF) with over five years of public accounting experience. Cami specializes in providing accounting and auditing services to for-profit and nonprofit entities and has worked within a variety of industries.