Federal and state tax credits for hybrid and electric vehicles

Federal and state tax credits for hybrid and electric vehicles

WANADA has received several dealer inquiries regarding tax credits available for hybrid and electric vehicles. Below you will find complete information on these federal and state credits as well as links to further information.

Federal and State Plug-in Hybrid Tax Credit: To qualify, vehicles must be newly purchased, have four or more wheels, a gross vehicle weight rating of less than 14,000 lbs., and draw propulsion using a battery with at least four kilowatt hours that can be recharged from an external source of electricity. The minimum credit for qualified plug-in electric drive vehicles is $2,500 and tops out at $7,500, depending on the battery capacity. This credit is available only for vehicles purchased between December 31, 2009 and December 31, 2011. Dealers should also know that once the manufacturer has sold at least 200,000 vehicles the credit will be reduced and phased out over a year. See IRS Notices 2009-54: Qualified Plug-in Electric Vehicle Credit (PDF 29kb) and 2009-58: Qualified Plug-In Electric Vehicle Credit Under Section 30 (PDF 19kb) for more information.

Federal Tax Credits for Advanced Vehicles: The comprehensive energy bill of 2005 set out tax credits for advanced vehicle technologies ranging from $250 to $3,400 depending on the vehicle’s level of fuel economy improvement. The full tax credits were available until a manufacturer reached 60,000 vehicles sold (e.g., 60,000 for Toyota, 60,000 for Ford, etc.). Once a manufacturer had sold 60,000 vehicles, a one-year “phase out” would begin after the next complete calendar quarter with 50 percent of the credit being available for that manufacturer’s hybrids in the first two quarters of the phase-out period and 25 percent in the final two quarters.

Toyota, Honda, and Ford have already met the 60,000 sales threshold and Federal tax credits are no longer available on hybrid vehicles from these automakers. An IRS list of the currently available tax credits for the 2010 and 2011 models of BMW, Cadillac, Chevrolet, GMC, Mercedes, Mercury, and Nissan hybrids can be found here. Not yet listed on the IRS website is the tax credit for the 2011 Hyundai Sonata Hybrid that will go on sale in mid-December. It will qualify for a $1,300 federal tax credit; however the credit expires on December 31, 2010.

Washington DC

Hybrid Vehicle Tax: The DC DMV Reform Amendment Act of 2004 exempts DC buyers of hybrid and other alternative fuel vehicles from paying the DC excise tax on their vehicle. If these vehicles also achieve a city fuel economy rating of at least 40 mpg, owners are charged a reduced registration fee of $36 for the first two years of the vehicles registration, which is half of the fee paid for a conventional vehicle ($72). After that, the owner of the vehicle will have to pay the regular registration fee.

Maryland

Tax Credit for Electric Vehicles: Maryland offers a tax credit for the purchase of qualified plug-in electric vehicles, of up to $2,000 until June 30, 2011. The credit is limited to one vehicle per individual.

Plug-in Hybrid HOV: Maryland authorizes plug-in vehicles with a state-administered permit to use HOV lanes regardless of the number of occupants. The state may charge no more than $20 for a permit. The HOV lanes exemption expires on September 30, 2013.

Vehicle Emission Tests Exemption Law: Hybrid electric vehicles that achieve a city fuel economy rating of at least 50 mpg are exempted from motor vehicle emissions testing and inspection requirements until September 30, 2012. After that date, a qualified hybrid vehicle is not required to submit to an emissions test and inspection until 3 years after the date when the vehicle was first registered in the state. The only qualified vehicles are the Generation 1 Honda Insight and the Toyota Prius manufactured prior to the 2008 model year. For more information, visit Marylands Motor Vehicle Administrations web page.

Virginia

State Hybrid HOV: Hybrid vehicle owners can register them with clean fuel license plates that permit them to use all HOV lanes in Virginia during HOV hours, including I-66 and the Dulles Toll Road in Northern Virginia, but not the HOV-3 lanes on I-95/395 from 6 to 9 a.m. or from 3:30 to 6 p.m. The HOV exemptions run through June 30, 2011.

The Department of Motor Vehicles (DMV) has created a new clean special fuel license plate for hybrid vehicles registered July 1, 20006 and after. The new plate has a distinctly different design to help Virginia State Police enforce the HOV restrictions.

Not all hybrids qualify for clean fuel license plates, but the following do: Toyota Prius (all years) Honda Insight: 2003, 2004, 2005, 2006 Honda Civic Hybrid (all years) Honda Accord Hybrid, 2006 and 2007 Ford Escape Hybrid, 2005, 2006, 2007, 2008 and 2009 Toyota Highlander Hybrid, 2006, 2007, 2008 and 2009 Lexus RX400 Hybrid, 2006, 2007 and 2008 Mercury Mariner Hybrid, 2006, 2007, 2008 and 2009 Toyota Camry Hybrid, 2007, 2008 and 2009 Lexus GS450h, 2007, 2008 and 2009 Nissan Altima 2.5 Hybrid, 2007, 2008 and 2009 Lexus RX 400h, 2007 and 2008 Lexus LS 600h, 2008 and 2009 Mazda Tribute Hybrid, 2008 and 2009 Toyota Camry Hybrid 2.4L, 2009. For all the rules, FAQs and most up to date list of qualified hybrid vehicles, visit the Virginia Department of Transportation’s web site.

There is an annual $25 surcharge for the clean special fuel license plate.

Tysons Corner Center Preferred Hybrid Parking: Tysons Corner Center has 15 hybrid-only parking spaces spread throughout the malls parking lots that are close to store entrances.