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Tax Credits for Qualified Plug-In Vehicles

Qualified Plug-In Electric Drive Motor Vehicles and Index to Manufacturers.

Auto manufacturers have significantly increased their offerings of passenger autos that are propelled solely or significantly by electric power. Plug-ins typically require the buyer to pay a premium because of the extra hardware and R&D involved, but the availability of a federal income tax credit may make their purchase more palatable. This article reviews the rules that apply and shows which autos from well-known manufacturers are credit-eligible according to the latest IRS data.

Basic requirements. Under Code Sec. 30D(a) , a taxpayer can claim a tax credit for each new qualified plug-in electric drive motor vehicle (abbreviated as a qualified vehicle in this article) placed in service during the tax year. The credit is claimed on Form 8936 (Qualified Plug-in Electric Drive Motor Vehicle Credit).

A qualified vehicle is one that ( Code Sec. 30D(d)(1) ):

    Is a motor vehicle, namely a vehicle manufactured primarily for use on public streets, roads and highways (not including a

    vehicle operated exclusively on a rail or rails), that has at least four wheels.

  1.       Is treated as a motor vehicle for purposes of title II of the Clean Air Act.

  2.       Has a gross vehicle weight rating (GVWR) of less than 14,000 pounds.

  3.       Is propelled to a significant extent by an electric motor that draws electricity from a battery that has a capacity of at least 4

  4.       kilowatt (kw) hours, and is capable of being recharged from an external source of electricity.

  5. The taxpayer must be the original user of the vehicle, which must be used predominantly in the U.S. ( Code Sec. 30D(f)(4) ), and must have acquired it for use or lease and not for resale. ( Code Sec. 30D(d)(1) )

    Amount of the credit. The amount of the credit for a qualified vehicle is the sum of: (1) $2,500; plus (2) for a vehicle that draws propulsion energy from a battery with not less than five kw hours of capacity, $417 for each kw hour of capacity in excess of 5 kw hours, but not in excess of $5,000. Thus, the maximum credit is $7,500, regardless of weight. ( Code Sec. 30D(b) ) Buyers of qualifying vehicles can rely on the manufacturer's or distributor's certification of the allowable credit amount.

    The credit (as computed above) phases out beginning in the second calendar quarter following that in which a manufacturer sells its 200,000th plug-in electric drive motor vehicle for use in the U.S. after 2009 (50% credit reduction in second and third quarter; 75% in fourth and fifth quarter; 0 credit allowed thereafter). ( Code Sec. 30D(e) )

    RIA observation: Electric vehicles generally haven't sold well in the U.S., so plenty of qualified vehicles continue to be eligible for the Code Sec. 30D credit. So far, no manufacturers have crossed the 200,000-vehicle production line, although GM might in 2018 or 2019 if sales of the Chevy Bolt and Volt continue at their current pace.

    Any portion of the credit attributable to depreciable property is treated as part of the general business credit. The remaining portion is a nonrefundable personal credit. ( Code Sec. 30D(c)(1) )

    The vehicle's basis, and any other allowable deduction or credit, must be reduced by the amount of the credit allowed. ( Code Sec. 30D(f)(1) , Code Sec. 30D(f)(2) )

    Credit amounts for qualified vehicles. Following is a list of the credit amounts for qualified vehicles that are autos and are manufactured by well-known companies, using the latest data published by IRS (model years are in parentheses):

    . . . Audi A3 e-tron (2016-2017), $4,502

  6. . . . Audi A3 e-tron ultra (2016), $4,502

  7. . . . BMW i3 Sedan with Ranger Extender (2014-2017), $7,500

  8. . . . BMW i3 Sedan (2014-2017), $7,500

  9. . . . BMW i8 (2014-2017), $3,793

  10. . . . BMW X5 xDrive40e (2016-2018), $4,668

  11. . . . BMW 330e (2016-2018), $4,001

  12. . . . BMW i3 (60Ah) Sedan (2017), $7,500

  13. . . . BMW 740e (2017), $4,668

  14. . . . BMW 530e (2018), $4,668

  15. . . . BMW 530e xDrive (2018), $4,668

  16. . . . BMW 740e xDrive (2018), $4,668

  17. . . . MINI Cooper S E Countryman ALL4 (2018), $4,001

  18. . . . FCA North American Holdings, Fiat 500e (2013-2017), $7,500

  19. . . . Chrysler Pacifica PHEV (2017), $7,500

  20. . . . Ford Focus Electric (2012-2017), $7,500

  21. . . . Ford C-MAX Energi (2013-2017), $4,007

  22. . . . Ford Fusion Energi (2013-2018), $4,007

  23. . . . General Motors Cadillac ELR (2014, 2016), $7,500

  24. . . . General Motors Cadillac CT6 PHEV (2017), $7,500

  25. . . . General Motors Chevrolet Volt (2011-2018), $7,500

  26. . . . General Motors Chevrolet Spark EV (2014-2016), $7,500

  27. . . . General Motors Chevrolet Bolt (2017), $7,500

  28. . . . Kia Soul Electric (2015-2017), $7,500

  29. . . . Kia Optima PHEV (2017), $4,919

  30. . . . Mercedes-Benz smart Coupe/Cabrio EV (2013-2016), $7,500

  31. . . . Mercedes-Benz B-Class EV (2014-2017), $7,500

  32. . . . Mercedes S550e PHEV (2015-2017), $4,043

  33. . . . Mercedes-Benz GLE550e 4m PHEV (2016-2017), $4,085

  34. . . . Mercedes-Benz C350e PHEV (2016-2017), $3,000

  35. . . . Mitsubishi i-MiEV [Electric Vehicle] (2012, 2014, 2016, 2017), $7,500

  36. . . . Nissan Leaf (2011-2017), $7,500

  37. . . . Porsche 918 Spyder (2015), $3,667

  38. . . . Porsche Panamera S E Hybrid (2014-2015), $4,752

  39. . . . Panamera 4 E-Hybrid (2018), $6,670

  40. . . . Porsche Cayenne S E-Hybrid (2015-2018), $5,336

  41. . . . Tesla Roadster (2008-2011), $7,500

  42. . . . Tesla Model S (2012-2017), $7,500

  43. . . . TeslaModel X (2016-2017), $7,500

  44. . . . Tesla Model 3 Long Range (2017), $7,500

  45. . . . Toyota Prius Prime Plug-in Hybrid (2017), $4,502

  46. . . . Toyota Prius Plug-in Electic Drive Vehicle (2012-2015), $2,500

  47. . . . Toyota RAV4 EV (2012-2014), $7,500

  48. . . . Volkswagen e-Golf (2015-2017), $7,500

  49. . . . Volvo XC90 or XC90 Excellence (2018), $5,002

  50. . . . Volvo XC60 (2018), $5,002

  51. . . . Volvo S90 (2018), $5,002

  52. . . . Volvo XC-90 T8 Twin Engine Plug in Hybrid (2016-017), $4,585

    RIA observation: State incentives can further drive down the cost of an electric vehicle. Residents of some states can get state income tax credits, rebates, or reduced vehicle taxes and registration fees for buying or leasing electric vehicles.

    References: For credit for new qualified plug-in electric drive motor vehicles, see FTC 2d/FIN ¶  L-18031  ; United States Tax Reporter ¶  30D4  .