Many clean energy experts say that 2022 is the year of electric vehicles (EV). Sales are skyrocketing, there are numerous new models available on the market, and gas prices have increased. As battery technology advances, the driving range of EVs is also expanding, and EVs are becoming more and more attractive to car shoppers.
In addition, there are some excellent EV incentives that reduce the total cost of purchasing a new battery-electric vehicle (BEV) or plug-in hybrid electric vehicle (PHEV). The federal government and some states are trying to decrease greenhouse gas emissions and reliance on oil by reducing the cost of EVs for consumers.
As an EV professional, it is helpful to know about the various incentives available in your area and how your clients can take advantage of them. Often, these incentives are relatively mysterious to the general public because they may change over time, so guidance can help boost the customer experience.
Let’s explore some of the federal, state, and utility incentives for EVs and home vehicle charging.
What EV Incentives Exist Today?
There are numerous federal and state EV incentives available throughout the United States. Some programs help reduce the cost of installing EV chargers, while others provide tax credits for qualifying electric cars, SUVs, and pick-up trucks. Because these incentives vary by state and even utility territory, it is critical to know which ones apply in your area.
Also, many of these programs were created to reduce the cost of EVs until the production costs decrease. Therefore, many of these programs are in effect for only a limited time. To ensure they are still operating, refer to EV incentive program websites.
Federal EV Tax Credits
A federal tax credit is a dollar-for-dollar reduction in federal income taxes owed to the IRS. Therefore, a $7,000 tax credit can reduce income taxes by $7,000. Unfortunately, the tax credit has no value if the customer doesn’t have a tax liability. Please note, it is critical to advise customers to speak with a tax expert to ensure they can utilize the tax credit. Since we are not tax pros, we cannot offer tax advice.
EV buyers may be eligible for up to $7,500 in federal tax credits for qualifying PHEV and EV models. However, the federal EV tax credits are a bit complicated. Eligibility varies by the automaker and the credit amount varies by the model, and the Inflation Reduction Act of 2022 added rules and regulations on where vehicles are assembled.
Two types of passenger vehicles can qualify for the tax credit: BEVs and PHEVs. Unfortunately, hybrids that do not have plug-in capabilities do not qualify.
Used EVs are eligible for a separate tax credit of up to $4,000 or 30% of the vehicle price, whichever is less -- as long as the vehicle is at least 2 years old.
The value of the tax credit varies by manufacturer and the capacity of the vehicle. Thus, not all EVs qualify for the full $7,500 tax credit and some don’t qualify for any credit. Refer to the FuelEconomy.gov website for current information, as this incentive changes over time.
It’s also important to remind clients if they buy an EV in 2022, they would apply the tax credit when they file their taxes for 2022 with IRS Form 8936, so they won’t see the benefit right away.
Eligible And Ineligible EVs
As of September 2022, some BEVs and PHEVs qualify for the full $7,500 federal tax credit, including these 2022 models:
BMW X5
Chrysler Pacifica PHEV
Ford Mustang Mach-E
Hyundai Ioniq 5 EV, Kona EV
Jeep Wrangler PHEV
Kia EV6, Niro EV
Lexus NX PHEV
Mazda MX-30
Nissan Leaf
Porsche Cayenne E-hybrid
Rivian R1T
Toyota RAV4 Prime PHEV
Volvo CX40 Recharge Pure Electric and S90 Extended Range
Other 2022 EV models qualify for a less than a $7,500 tax credit, including the:
BMW 330e, 530e, 745e
Ford Escape PHEV
Ioniq PHEV
Kia Sorento PHEV
Mitsubishi Outlander PHEV
Subaru Crosstrek Hybrid
Toyota Prius Prime PHEV
Volvo S90
Unfortunately, some 2022 EV models are not eligible for the federal tax credit including the:
Chevrolet Bolt, Bolt Electric Utility Vehicle
GMC Hummer EV
Tesla Model 3, Model Y, Model S, Model X
Are There EV Rebates Available For EVs?
Most of the rebates for qualified EVs are offered through state governments. These incentives often change over time and some have tapered off completely. In other cases, the programs are in effect until the funding is exhausted.
Federal EV Rebates
Although there are federal tax credits available for many EV models, there are no federal EV rebate programs at this time.
State EV Rebates
There are numerous programs available through utility companies, states, and local governments. Although some incentives have tapered out, there are still some programs that are still fully funded.
To learn more about specific incentives, refer to the Department of Energy database. Also, many of these programs have residency requirements and some have additional funds available for low-income households. Here are a few of the most notable state programs for purchasing or leasing an EV.
California
The California Clean Fuel Reward reduces the total cost of purchasing or leasing a new electric vehicle with a battery capacity of 5 kWh or greater by up to $750. This incentive has a sliding scale, depending on the capacity of the battery.
Colorado
There are EV tax rebates available in Colorado up to $2,500 for purchasing or leasing qualified EVs. The incentive is worth $2,500 for purchases and $1,500 for leases in 2022 and then tapers down to $2,000 from 2023-2025 for purchases and $1,500 for leases.
Connecticut
The Connecticut Hydrogen and Electric Automobile Purchase Rebate (CHEAPR) offers incentives for new, used, and leased BEVs, PHEVs, and fuel-cell electric vehicles. The size of the rebates varies by the model and will continue through the end of 2022 or until funds are exhausted.
Maine
Efficiency Maine offers $2,000 rebates for eligible new BEVs and $1,000 for PHEVs. For low-income individuals, there are larger rebates available, including incentives for used EVs.
New York
New York State Energy Research and Development Authority (NYSERDA) provides rebates of up to $2,000 for the purchase or lease of a new eligible plug-in EVs.
Oregon
The Oregon Clean Vehicle Rebate Program offers incentives up to $2,500 for vehicles with at least a 10 kWh battery. Larger incentives up to $5,000 are available for low to moderate income households.
Electric Vehicle Service Equipment (EVSE) Rebates
Installing vehicle chargers is critical for making electrified driving more convenient. Level I chargers can take many hours to fully charge a vehicle battery. Often, home and business owners want to install Level II chargers because they significantly shorten charging times. EVSE rebates help reduce the cost of investing in EV chargers.
These rebates are typically offered through electric utility companies, which vary depending on the location. There are EVSEs available through some utilities in the following states: Idaho, Illinois, India, Iowa, Maine, Massachusetts (DC fast chargers), Michigan, Mississippi, Nebraska, New Hampshire, New Mexico, North Carolina, Oklahoma, Rhode Island, Tennessee, Texas and Utah.
What Credits And Rebates Apply To Plug-In Hybrid Vehicles (PHEVs)?
Many of the same incentives available for battery electric vehicles also apply to plug-in hybrids, including the federal tax credit and many of the state EV rebate programs. In some cases, there might be requirements regarding the minimum capacity of the battery and all-electric driving range.
EVs And PHEVs Can Be More Affordable Than You Think
Due to the federal EV tax credit and some state rebate programs, purchasing a new EV might be more affordable than it initially appears. Although EVs have been a niche market, they are beginning to enter the mainstream. This creates a lot of opportunity for EV professionals due to the need to rapidly expand the EV charging infrastructure.
To help get your next EV project off the ground, work with the GreenLancerEV team.