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Fuel Efficient Motor Vehicle Tax Credits

February 6, 2014

If you drive certain motor vehicles such as an electric or hybrid car, then you can claim a tax credit that can bring down your tax bill. Your vehicle will need to fulfill certain eligibility criteria determined by the IRS, so if you own a fuel efficient motor vehicle, keep reading!

Tax Credit for Electric Vehicles
Electric vehicles (EVs) bought in 2010 or later are eligible for a tax credit of up to $7,500. An electric vehicle needs to qualify for a taxpayer to claim the credit. A certified EV must meet the following requirements:

  • You use the vehicle regularly.
  • The vehicle is new.
  • The vehicle is acquired for use or lease by the taxpayer, and not for resale.
  • The EV is primarily used in the U.S.

The amount of credit you can claim depends upon the battery and other specifications. To claim this credit, you need to fill out Form 8936, Qualified Plug-in Electric Drive Motor Vehicle Credit. If you are using the qualifying EV for business use, then you must report it on Form 3800, General Business Credit.

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

Tax Credit for Plug-in Hybrid-Electric Vehicles (PHEVs)
If you purchased a PHEV after February 17, 2009, and before January 1, 2012, and meet the required specifications, then you can claim this credit. You can claim a credit of up to $7,500 for a qualifying PHEV purchased on or after 2010. The credit amount depends on the capacity of the battery and other criteria. To claim this credit, you may use Form 8936. If you are using the vehicle for business use, you may report on Form 3800, General Business Credit.

The tax credit for alternative fuel vehicles (AFV), diesel vehicles, and hybrids expired in 2010.

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