June 17

Tax Incentives For Hybrid Vehicle Owners

0  comments

As electric propulsion systems continue to evolve, their popularity in cars, trucks, and SUVs grows. However, even with the technology advancing to the point where EVs often out-perform their gas counterparts, some drivers remain wary of switching. That’s where the hybrid vehicle can help. 

Hybrid electric vehicles blend the power of a gasoline engine with the energy produced by an electric motor. This powertrain configuration delivers more torque and better mileage than a gas-only vehicle. However, most people don’t fully understand EVs and often have misconceptions about their performance and reliability. The gas engine helps relieve these concerns making it the ideal first step toward zero-emissions driving.

To further aid in the effort, the federal government offers incentives to manufacturers to produce more EVs and tax incentives to those who purchase them. Here, we explore the available incentives and discuss the additional benefits of EV ownership.

Federal Tax Credit

Hyundai Incentives for Hybrid and Electric Vehicles

Image via Flickr by Dennis S. Hurd

You may have seen advertisements touting the $7,500 federal tax credit if you purchase a hybrid or electric vehicle. However, conditions must be met to receive this credit, and it isn’t always a $7,500 credit. The way the incentive was legislated allows for a tax credit of “up to $7,500.” If you owe $4,000 in taxes and purchase a qualifying vehicle, you will receive a credit equal to the amount you owe up to $7,500. 

In this case, you would receive a $4,000 credit bringing your tax debt to zero. You won’t receive an additional $3,500 in a refund. If you were receiving a refund anyway, you might see nothing in a credit. Additionally, you can’t apply that $3,500 against the following year’s tax burden. Instead, it’s a one-and-done and only up to your tax debt.

Battery Capacity Rules

Buyers also must consider the type of EV they buy because the amount of your tax credit depends on the capacity of the battery used. One rule governing the tax credit states that the battery must be recharged using an external source. That rules out all HEVs because they don’t have plug-in charging capability. Instead, they recharge the battery by converting energy from the combustion cycle.

Another rule requires the battery must have a capacity of 5-kWh or greater. This rule has far less impact on qualifying because most PHEVs and EVs use batteries from 15 to 200-kWh. The larger the battery capacity, the larger the tax credit. You would receive a $2,500 minimum credit for the smallest battery, and the credit caps off at $7,500.

Do Used EVs Qualify for the Tax Credit?

Used vehicles don’t qualify for the tax credit either. Only new cars from the 2010 model year and newer are eligible. In addition, the federal government only offers the tax credit for the first 200,000 vehicles sold by each manufacturer. At this stage, Tesla and General Motors have reached this plateau, so purchasing an EV from them won’t qualify you for the tax credit. The government plans to extend the tax break soon, but there’s no firm timetable.

Can You Qualify for the Tax Incentive on a Lease?

The federal government grants the tax incentive to the manufacturer when they lease an EV, not to the person leasing the vehicle. In most cases, manufacturers use this as an incentive and pass the savings to their customers. If a manufacturer offers this deal, you could pay little to nothing at all to start your lease.

Benefits of PHEV and EV Ownership

You won’t pay as much in gasoline with a PHEV and nothing for an EV. In addition, gasoline prices tend to fluctuate much more dramatically than electricity rates, so when you switch to an all-electric vehicle, you insulate yourself from rising prices. 

Charging your PHEV at home allows you to take advantage of off-peak electricity rates. Most home charging stations now feature a charging scheduling system where you program the time to start and stop. Newer charging stations allow you to operate these from your cellphone using an app for even more convenience.

Everyone is responsible for our planet. Keeping the land, air, and oceans clean protects future generations against climate change, erosion, and failing habitats. Knowing you have lowered your carbon footprint gives PHEV and EV owners the satisfaction they’ve done something good.

Hyundai PHEVs and EVs Qualifying for the Tax Credit

The following table describes the federal tax credit for Hyundai vehicle.

Hyundai Year, Make, and Model

Vehicle Type

Tax Credit Amount

2018-2022 Ioniq PHEV

PHEV

$4,543

2016-2019 Sonata PHEV

PHEV

$4,919

2022 Tucson PHEV

PHEV

$6,587

2022 Santa Fe PHEV

PHEV

$6,587

2017-2021 Ioniq Electric

EV

$7,500

2022 Ioniq 5

EV

$7,500

2019-2022 Kona Electric Vehicle

EV

$7,500

We retrieved this list from fueleconomy.gov which was last updated on April 21, 2022.

Additional requirements to qualify for the tax credit include:

  • The vehicle must be made by a manufacturer, not a conventional car converted to electric drive.
  • According to Title II of the Clean Air Act, it must be treated like a vehicle.
  • It must have a gross vehicle weight rating of 14,000 pounds.
  • The vehicle must be acquired for use by the taxpayer, not for resale. 
  • The vehicle must be used primarily in the United States.
  • The vehicle must be placed in service during or after the 2010 calendar year.

Texas Incentives

Many states have developed their own programs. We encourage you to check with your state for more details. For instance, Texas offers discount electricity plans for PHEV and EV owners. 

The future of PHEVs and EVs continues to evolve and has already revolutionized the automobile industry. Huffines Hyundai McKinney plans to lead the way as more consumers switch to these alternative energy vehicles. If you would like to learn more about Hyundai’s PHEV and EV options, please feel free to browse our inventory online

Then, when you’re ready for a personal demonstration of the power of electricity in a Hyundai, you can visit our dealership on North Central Expressway. One of our EV specialists will answer all your questions and let you drive the vehicle of your choice. We’re confident you’ll quickly see you won’t have to compromise quality or reliability with a PHEV or EV from Hyundai.




Tags


You may also like

Winter Things to do in McKinney, TX

Winter Things to do in McKinney, TX
{"email":"Email address invalid","url":"Website address invalid","required":"Required field missing"}