NQPEDMV credit for Electric Cars

By | March 15, 2015

There are tax benefits connected with a purchase of a “plug-in electric vehicle” (a vehicle propelled to at least a significant extent by an electric motor propelled by a battery capable of being recharged from an external source of electricity). Can you get this tax credit with Tesla or a Nissan Lead?


What is the NQPEDMV tax credit for Electric Vehicles?

There is available a tax credit called the “new qualified plug-in electric drive motor vehicle” credit (NQPEDMV credit). Two-wheeled or three-wheeled vehicles aren’t eligible for the NQPEDMV credit, but, for those vehicles, acquired before Jan. 1, 2014, there is available a separate credit for qualified 2- or 3-wheeled plug-in electric vehicles.

A vehicle eligible for the NQPEDMV credit must have battery capacity of at least four kilowatt hours, and the base amount of the NQPEDMV credit is $2,500 per vehicle. The allowable credit increases to $5,000 per vehicle based on a formula which increases the credit by $417 for every kilowatt hour of battery capacity in excess of five. Many of the newer electric cars are eligible for this tax credit.


Info about the NQPEDMV credit:

  • The credit is allowed in the year you place the vehicle in service.
  • The original use of an eligible vehicle must begin with you, the purchaser, i.e. the vehicle must be new.
  • An eligible vehicle must be used predominantly in the U.S., and have a gross weight of less than 14,000 pounds.
  • The credit is allowed if you buy a vehicle for lease to another, but, generally, not allowed if you buy a vehicle for resale.
  • The tax benefits otherwise available for an eligible vehicle are reduced unless you make an election not to apply the credit to the eligible vehicle.


Getting Tax Credit For Electric Cars

Rules that might limit the application of the credit against regular and alternative minimum taxes are different for the portion (if any) of the credit attributable to personal use and the portion (if any) attributable for business or other for-profit use.