Sections below:
Since 2008 there has been a $7,500 Federal tax credit incentivizing the purchase (or lease) of an electric vehicle, and it was pretty simple. Any pure electric car got the full credit, and PHEVs got a credit too although often less than the full $7,500 depending on battery size. There was a 200,000 car max per manufacturer, which perversely penalized the manufacturers who were earliest to develop and sell large quantities of EVs (notably Tesla and GM). But with that said, the tax credit was still pretty simple to understand.
In August 2022, the Inflation Reduction Act was passed, and it introduced a completely new structure for EV tax credits. The incentive was still $7,500 (max per car), but there were new requirements for an EV model to qualify, because the Biden administration was using this policy to incentivize manufacturers to set up their supply chains and vehicle assembly in the United States. These incentives were then killed entirely by the Trump administration, ending Sept 30th 2025.
Right up front, you should know that in most cases you don’t actually need to file complicated IRS forms, or wait around a year for the credit refund, or wonder if you have enough tax liability. The “POS transfer” option effectively means that most of that is taken care of, although you do still need to file one pretty simple form with the IRS. Further, the “lease loophole” completely eliminates any filing requirement. Both are described at length below.
Following the 2022 revamp, the tax credit required two things for EVs to qualify:
This had the immediate effect of disqualifying most pure electric cars from the tax credit, including nearly every EV from a foreign carmaker. Over the following years, some carmakers did indeed shift final assembly to the USA, and worked to diversify their battery sourcing so that it didn’t come from China.
A hallmark of the new EV tax credit is that it ratcheted up the requirements every year; in particular the battery sourcing requirements got more stringent. The SAFE / EC fast sheet in the references / articles section below has a good chart that shows how these requirements changed every year. Further, various dollar limits kicked in, specifically:
See the references / articles section below for more complete details.
Up through end of 2023, this was all still about a tax credit that you filed for on your tax return. Since you wouldn’t get that credit until you filed and then get your refund, you needed to wait for a while before you actually saw the benefit. Further, though, you had to rely on statements from the manufacturer or IRS (or worse, the dealer) on whether the car was really eligible for the tax credit, and note that eligibility was constantly changing per the “ratcheting” changes described above.
Starting in January 2024, all credits became available as Point Of Sale (POS) credit, specifically because the tax credit due to you would be “transferable” to the dealer. This means that you can effectively get the credit right away at the moment of purchase as an instant rebate, and don’t have to wait to claim it on your tax return a year or so later. You see the exact amount of the tax credit (and use it to reduce the cost of the car) on day of purchase, and no longer need to rely on dubious statements from the dealer or whomever.
This new POS / transferability feature applies to both new and used sales.
If you are leasing, you don’t need to worry about any of the above details (tax liability or IRS paperwork). The tax credit is already rolled into your lease in the form of a lower payment. The leasing bank takes the credit and passes it through to you in the lower lease cost.
Crucially, however, all EVs qualify for the tax credit if they are leased. A lease is considered a business transaction (the dealer is actually selling the car to a bank, not to you), and EV purchases by businesses were covered by a different part of the IRA legislation. Leased EVs do not have the final assembly or battery sourcing requirements, therefore all EVs qualify for the tax credit if they are leased. All leases get the tax credit. All leases get the tax credit. You’re hearing this, right?
This gigantic lease loophole made leases wildly popular for EVs, especially those that don’t qualify for the tax credit if you just do a regular purchase. If you’ve never done a lease before, see the leasing page here, consider getting over your fear, and note that you can still buy the car at the end of the lease.
Starting in 2023, a new tax credit kicked in for the purchase of used cars. In short, you can get up to $4000 off the cost of used EV! Details:
Useful resources for the used EV tax credit:
If you transfer the credit to the dealer, thus getting the benefit of the credit right away, then the dealer should give you two documents at the time of sale:
If you are not transferring the credit to the dealer, and are filing for the credit yourself, then:
Regardless of whether you transferred the credit to the dealership, or filed to get the credit yourself, when you file your tax return next year, use IRS form 8936 (not 8834) to report that you bought an EV. Even if you transferred the credit to the dealer, and got the benefit on the day that you bought the EV, the IRS needs to see your filing to correlate it to the similar filing about your car that they got from the dealership. They also need to confirm that you qualified for the tax credit (income limits).
From the IRS, here are examples of the Form 15400 for a new EV and Form 15400 for a used EV.
Again, the “lease loophole” bypasses all of this reporting and filing minutae, and still gives you the benefit of the credit.
Plug In America, a non-profit EV advocacy organization aimed at consumers. They have a number of fantastic resources on this EV tax credit subject:
The Electrification Coalition is a similar organization, but focused more on advocacy in federal and state legislatures to get smart legislation in place, and supporting government fleet electrification. They have partnered with Securing America’s Future Energy (SAFE) to produce these useful resources:
A few more general resources:
These are tax credits, not tax deductions. Assuming you have enough tax liability, a tax credit can be thought of as a direct refund to you, typically in the form of a refund check after your file your tax return with the IRS.
Many people misunderstand the concept of a tax credit, or don’t realize how much state or federal income tax they pay every year. The EV incentives discussed here are tax credits, which are far more valuable than just tax deductions. When looking at your tax liability to the US or to Georgia, look for the “total tax” line on your most recent tax return — NOT the refund or amount-due line! The total tax line is the actual tax you’ve been paying, usually via withholding on every paycheck. The refund / amount-due line is what was left over after your paycheck withholdings were accounted for. Don’t mix up these two numbers!
All major tax preparation software packages support the various forms required to collect these tax credits.
WARNING: Georgia’s EV tax credit was killed in 2015! The information below was collected in 2014-2015 in an effort to fight it, and is kept here now only for historical reference. Some links below may now be broken.
The Georgia EV tax credit:
– … is an income tax credit (not deduction!) of $5000 for purchase or lease of pure electric cars (e.g. Leaf yes, Volt no)
– … CAN be carried over year-to-year for five years, which is useful if you don’t have $5000 of state tax liability in a single year
– The Georgia paperwork process is described in both of these links:
— http://epd.georgia.gov/air/alternative-fuels-and-tax-credits
— http://epd.georgia.gov/air/sites/epd.georgia.gov.air/files/2015%20LEVTAX%20Fact%20Sheet%20REVISED%202015_09.pdf
– Unlike the federal credit, for the state credit you DO need to file your own paperwork, even if you are leasing; if a dealer tells you otherwise, politely ignore them because they are confused.
– The state tax credit ended July 1st 2015 however as long as you bought or leased your EV before that date you still qualify for the credit
– You need to file a form with the state environmental office at least a month before you file your tax return! Read the instructions linked above. If you put off your tax paperwork until early April you may find that you are doing so too late to collect the state tax credit.
The 2015 threat to the state tax credit
The Georgia legislation that enabled the state tax credit many years ago did not have a sunset provision, or a budgetary cap. However, it was only in 2011 that usable EVs finally arrived on the market and more and more people started claiming the credit, and within a couple years state legislators started to notice the growing line item in the state budget. In the 2014 session of the state legislature, the credit nearly got killed outright, and was only saved in the last hours of the session. The credit was eventually killed in the 2015 session, despite concerted efforts during 2014 that resulted in proposed compromise legislation (HB 220) that ramped down the tax credit.
This Atlanta EVDC article summarizes how terrible the 2015 session was for EV policies.
Here’s another post-mortem by Maria Saporta — “we have managed to go from being among the best to the worst in just one legislative session.”
During the 2015 legislative battle, I put together the information below to provide resources to assist YOU, the citizen, in explaining to your state legislators (and neighbors, and coworkers, and strangers …) why EV-friendly policies are good for Georgia.
GAEVCredit.com — this website was launched in early 2015 by the people who had worked to create some compromise legislation. The end result of their work was HB 220, a bill that provided a “workable compromise” to gradually sunset the tax credit and also address some unfair parts of the old legislation. See this website for information about that bill and how the tax credit benefits all Georgians.
www.UCSUSA.org/ElectricVehiclesGeorgia — The Union of Concerned Scientists (UCS) is a national organization that is helping us get the word out to Georgians about the benefits of EVs. This link takes you to excellent material in support of continuing the tax credit and information about how EVs are a good choice in general.
“Electric Vehicles and Georgia (2015)” — accessed via the main UCS link above, this four-page fact sheet summarizes the main reasons to support EV-friendly polices in Georgia, including:
– EVs are cheaper to fuel
– EVs keep more money in the state
– EVs are cleaner (even when powered by a dirty power grid)
– EVs pair well with renewable energy sources
Comparison table of three bills in Georgia House (HB 122, HB 176, HB 220) — this excellent table will help you make sense of the different bills being considered; note that HB 220 is the consensus bill that is gathering the most support. This table comes from this article from the Atlanta EVDC. Note that this table is from mid February and may be dated information at any time after then, since the legislative situation can change quickly.
EV tax policy defense talking points and Transportation Committee contact lists (Google Doc)
Impact of Elimination of the Electric Vehicle Tax Credit on the Georgia State Economy, a report that shows how eliminating the tax credit would negatively impact Georgia’s economy by hundreds of millions of dollars over the coming years. The report was commissioned by a nonpartisan group of business executives and retired senior military leaders concerned about global energy security, known as Securing America’s Future Energy (SAFE).
Below are two articles by Tim Echols, member of Georgia’s Public Service Commission and a happy EV owner. Each of these serves as a fantastic collection of quick talking points to review with any state legislator (or your neighbor, or your Facebook friends), reasons why we should keep the EV tax credit.
Why Retain the ZEV/LEV Income Tax Credit In Georgia?
Keep Georgia’s EV tax credit in place
(in the second link, Mr. Echols’ position is followed by that of a state rep who wants to kill it)
In summary:
– EVs keep more money close to home instead of sent to oil companies out of state or overseas.
– The tax credit received comes back after we file our taxes as a refund, and then gets spent. It buys things in Georgia like clothes, appliances and services.
– EVs fit nicely with our electric grid here. Overnight charging takes advantage of the excess capacity we have at those times.
– EVs help Atlanta’s smog problem and will help us get back in compliance with the EPA.
– EVs send a strong message to millennials about our priorities. This investment makes Atlanta a more livable city where people want to be.
And I’ll quote the first article’s closing paragraph in total, because it’s so good:
Nissan is having great success with the LEAF and Georgia is the 2nd largest market in the U.S. for all EVs. But behind Nissan, BMW, Kia and many other manufacturers are coming with electric cars. Our message to the legislature needs to be to hold off for another year before taking action. Let’s allow the other manufacturers to benefit as Nissan has done. Then, if they decide to eliminate this credit, do it slowly and phase it out over the next decade. Georgia has a great business climate, in part because we don’t make knee-jerk regulations causing uncertainty and confusion in the marketplace. Let’s not change that now.
Seriously, read the article, because it’s a great summary of the issues.
You don’t have a lot of time, and you just want to fire off an automated email to legislators about this? Use this form at bit.ly/GaEVTax to voice your support for EV-friendly state policies. It’ll use your ZIP code to figure out who to send it to, and put your name on it. A phone call can make more impact, but if you don’t even have the time to do that, at least fire off one of these automated emails.
Finally, use this link to look up who your state legislators are (you have two) and pick up the phone and CALL THEM to let them know your position on EV-friendly policies! Also consider contacting the relevant committee members and legislative leadership.
Take the time to talk to your friends and co-workers about this. There’s a lot of misinformation out there, and if you are an EV owner, YOU are uniquely qualified to correct and educate.
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