Tax Benefits of Owning an Electric Car

The federal government of the United States offers tax incentives for qualifying alternative fuel vehicles (AFVs). While not technically alternative fuel vehicles electric cars benefit from some of these tax breaks. Qualifying electric car buyers can receive up to $4000 in federal tax credits and in some states they would receive a break from state taxes as well.

There are a few things to keep in mind when applying for the tax credits. First of all you'll need to find out how many vehicles the manufacturer of your electric car has sold. The law only provides for tax breaks on the first 60,000 vehicles sold. If your car is number 60,001 then you won't be getting any federal tax credits, state taxes may differ.

Know the weight of your electric car, the maximum amount of the tax credit will depend on the weight of your car.

If you're buying a fleet of electric cars for a business then you can maximise your tax breaks by purchasing a number of electric cars at once.

As far as forms you'll need to fill out IRS Form 8910, available here (http://www.irs.gov/pub/irs-pdf/f8910.pdf).

Other things to keep in mind are dates of elegibility in your state and whether or not other tax breaks like the EIC would be better to use rather than the electric car credit. Note also that the tax credit for electric cars only applies to your annual liability. You cannot receive a refund based on your electric car credit.

Be sure to contact your electric car dealer for more information on tax breaks for owning an electric car. They will be able to provide with exact numbers for federal and state taxes related to your state and the model of car you purchase.

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