Incentives and Tax Credits for Purchasing Electric Vehicles

Sudeep Moniz is a Melville, New York-based financial services professional who works in the energy sector. In addition to staying up to date on the latest developments in alternative energy, Sudeep Moniz has an interest in autonomous driving and electric vehicles.

Electric vehicles represent less than 2 percent of all vehicles in the United States and only 2.2 percent of all vehicles worldwide. Norway, which is one of the biggest markets for electric vehicles with sales comprising around 30 percent of all new vehicles, has an abundance of perks and subsidies to entice consumers to make the switch to a plug-in car. The Canadian government, meanwhile, recently introduced a $5,000 purchasing incentive for vehicles under $45,000 with hydrogen fuel cells or electric batteries.

The new Canadian measure is similar to that of the US, where the Internal Revenue Service offers a tax credit between $2,500 and $7,500 for new electric vehicles, depending on the vehicle's size and battery capacity. However, the tax credit is only offered until a qualified manufacturer has sold at least 200,000 electric vehicles, at which point it begins to be phased out for that particular automaker.

The amount of credit offered for respective vehicles can be found at fueleconomy.gov/feg/taxevb.shtml. For example, the new 2019 Hyundai Kona has a full tax credit of $7,500, whereas its 2019 Ioniq plug-in hybrid carries a tax credit of $4,543.