Tax Credits for Electric Vehicles Under the American Recovery and Reinvestment Act

The law allows for tax credits for 2 types of plug-in electric vehicles. They are:

Plug-In Electric Drive Vehicle Credit - this is a tax credit for vehicles with 4 or more wheels and a gross vehicle weight of under 14,000 pounds that draws propulsion from a battery with at least four kilowatt hours that can recharged from an external source of electricity, hence the term "plug-in". The amount of the credit ranges from $2,500 to $7,500 depending on the battery capacity. This credit is for qualified vehicles purchased after Dec 31, 2009 and will be reduced for manufacturers after they have sold 200,000 vehicles.

Plug-In Electric Vehicle Credit - this credit applies to two types of vehicles, certain low-speed electric vehicles and two or three wheeled vehicles. Qualified vehicles are those with an electric motor that draws electricity from a battery with a capacity of 4 kilowatt hours or more or be a two or three wheeled vehicle propelled by an electric motor from a battery with a capacity of 2.5 kilowatt hours. The amount of credit is 10% of the purchase price of the vehicle up to maximum of $2,500. Purchases must be made between Feb. 27, 2009 and Jan. 1, 2012 and cannot be claimed if the plug-in electric drive vehicle credit is allowable.

One other credit available is for:

Conversion Kits - this credit is for plug-in electric drive conversion kits. The amount of the credit is 10% of the cost of converting the vehicle to a plug-in electric vehicle. The vehicle must be placed in service after Feb. 17, 2009 and before Dec. 31, 2011.