New Tax Credits for Electric Vehicles

The Internal Revenue Service recently came out with an explanation that covers two new tax credits for electric vehicles.

You’ll get a charge out of these

Here at Auto Credit Express, we wanted you to be aware of tax credits for electric vehicles that were part of the Emergency Economic Stabilization Act (EESA) of 2008 and the American Recovery and Reinvestment Act (ARRA) of 2009 that could have a positive impact on your 2009 income tax return.




According to the IRS, provisions of the American Recovery and Reinvestment Act created a tax credit for low-speed or two or three-wheeled electric vehicles such as motor scooters. In order to qualify for the credit, you must purchase this type of vehicle after February 17th of 2009 and before January 1st of 2012. The amount of the credit is 10% of the cost of the vehicle up to a maximum amount of $2,500.

The vehicle must be:

1. A low-speed vehicle (such as a neighborhood vehicle) that is propelled to a “significant extent” by a rechargeable battery with a capacity of at least 4 kilowatt-hours or
2. A two or three-wheeled vehicle that, also, is propelled to a “significant extent” by a rechargeable battery with a capacity of at least 2.5 kilowatt-hours.


The Emergency Economic Stabilization Act also contains provisions for a tax credit for vehicles that have at least four wheels that are powered through the use of a rechargeable traction battery that has, as a minimum, 4 kilowatt-hours of storage capacity. For 2009, the minimum credit for this type of vehicle is $2,500 and the credit maxes out at anywhere from $7,500 to $15,000, depending on the vehicle’s weight and the capacity of its battery.

GEM e2

GEM e2

Claiming both credits

For 2009, it is possible that low-speed, four-wheeled vehicles that are manufactured primarily for use on public streets and highways (commonly called “neighborhood vehicles” such as the “peapod” or the GEM line) may qualify for both the EESA and the ARRA credits, provided the vehicle was purchased after the February 17th inception date for ARRA.

But you need to be careful. Both credits cannot be claimed for the same vehicle (obviously, if you purchase two vehicles, you can use one for each if both qualify and you should take the higher of the two credits for the vehicle that qualifies for the highest credit).

One other thing to note: Vehicles manufactured primarily for off-road use (such as for use on a golf course) don’t qualify for either credit.

Check before you buy

The IRS is currently working on guidelines for certification for both credits, so be sure and check with their web site,, for any clarification before you make a buying decision.

Posted on April 27, 2009 by in Uncategorized
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