Tax Breaks Available for Taxpayers Who Purchase Qualified Plug-In Electric Vehicles

The IRS recently published a new press release discussing tax breaks available for qualified plug-in electric vehicles. Check out the text of the release below.

Plug-in electric vehicles using certain types of batteries may qualify for a new tax credit if purchased this year, the Internal Revenue Service said today.

The Emergency Economic Stabilization Act of 2008 (EESA) and the American Recovery and Reinvestment Act of 2009 (ARRA) created two new tax credits for various types of electric vehicles, which may include what are commonly referred to as neighborhood electric vehicles.

ARRA creates a tax credit for low-speed or two- or three-wheel electric vehicles, such as motor scooters, purchased after Feb. 17, 2009, and before Jan. 1, 2012. The amount of the credit is 10 percent of the cost of the vehicle, up to a maximum credit of $2,500. To qualify, a vehicle must be either a low-speed vehicle that is propelled to a significant extent by a rechargeable battery with a capacity of at least 4 kilowatt hours or be a two- or three-wheeled vehicle that is propelled to a significant extent by a rechargeable battery with a capacity of at least 2.5 kilowatt hours.

EESA created a tax credit for vehicles that have at least four wheels and draw propulsion using a rechargeable traction battery with at least four kilowatt hours of capacity. For 2009, the minimum credit is $2,500 and the credit tops out at $7,500 to $15,000, depending on the weight of the vehicle and the capacity of the battery.

During 2009, low-speed, four-wheeled vehicles manufactured primarily for use on public streets, roads and highways (neighborhood electric vehicles) may qualify both for the EESA credit and, if purchased after February 17, 2009, for the ARRA credit for low-speed electric vehicles. A taxpayer may not claim both credits for the same vehicle. Vehicles manufactured primarily for off-road use, such as for use on a golf course, do not qualify for either credit.

The Internal Revenue Service is working on guidance regarding certification procedures for both of these credits.

Ford Hybrid Owners to Get Tax Credit up to $3,400

From BusinessWeek.com:

Consumers who order or purchase a new 2010 hybrid vehicle from Ford Motor Co. by the end of March are eligible for a tax credit, the company said Wednesday.

Purchases or orders of new Ford Fusion and Mercury Milan hybrids made by March 31 will qualify for a $3,400 credit on their 2009 tax returns.

The company unveiled its hybrid version of the Ford Fusion last November that can go up to 47 miles per hour on battery power alone. The Fusion gets 41 miles per gallon in the city and 36 mpg on the highway.

The Ford Escape and Mercury Mariner hybrids are still eligible for a $3,000 tax credit. The credits vary due to the performance of the vehicle. The Escape and Mariner get 34 mpg in the city, and 31 mpg on highways.

Ford said its Fusion hybrid would be in showrooms by March 31, but did not offer pricing details. Consumers have shied away from the electric-gas combo cars as gas prices have fallen rapidly since last summer, as the cost savings deteriorated.

According to the auto Web site Edmunds.com, hybrid sales plunged 43 percent in December and 50 percent in November, surpassing the industry's overall sales decline of 36 percent in December and 37 percent the month before.

Fusion and Milan hybrids purchased between April 1 and Sept. 31 are eligible for a $1,700 credit. The tax credit drops to $850 for purchases between Oct. 1 and March 31, 2010. The credit drops over time because Ford has more than 60,000 hybrid vehicles on the road, and tax regulations state that the credit must be phased out after that threshold is met.

"The whole idea is to encourage early adopters," said Ford spokeswoman Jennifer Moore.

New Ford hybrids purchased on or after April 1, 2010 will not be eligible for a tax credit.