Where Can You Get the Biggest Electric Vehicle Tax Breaks?

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Tax breaks can help you purchase an EV. 

Want to purchase an electric vehicle? Now may be the right time. The federal government is offering a federal tax credit up to $7,500 for purchasing an electric vehicle that meets certain qualifications. In addition to this incentive, many states offer others, such as income tax credits, rebates, reduced sales taxes, and much more.

On top of that, local cities, counties, and utility companies offer incentives such as reduced licensing or charging station fees, utility bill credits, or lower rates when charging your EV. How much you qualify for will depend on where you live and the type of car you purchase, as well as other factors (like your income level). Here are states with the biggest EV tax breaks.

Connecticut: Up to $9,500

Connecticut’s Hydrogen and Electric Automobile Purchase Rebate Program (CHEAPR) offers rebates ranging from $750 to $9,500. Rebates are available in the following amounts:

Plug-in hybrid electric vehicles (PHEVs): $750Light-duty electric vehicles (EVs): $2,250Fuel cell electric vehicles (FCEVs): $4,500

CHEAPR offers an additional rebate, Rebate Plus, for those who qualify as low income.

Plug-in hybrid electric vehicles (PHEVs): $1,500 (New); $1,125 (Used)Light-duty electric vehicles (EVs): $2,000 (New); $3,000 (Used)Fuel cell electric vehicles (FCEVs): $2,500 (New); $7,500 (Used)

Colorado: Up to $8,000

Colorado offers a state tax credit that ranges from $2,000 to $8,000 for a new EV purchase and $1,500 to $5,000 for a new EV lease. The amount depends on the type of electric vehicle. Like the federal credit, you can assign the state tax credit so you get the discount upfront when you purchase or lease the EV.

Light-duty EV: $2,000 for purchase; $1,500 for leaseLight-duty electric truck: $2,800 for purchase; $1,750 for leaseMedium-duty electric truck: $4,000 for purchase; $2,500 for leaseHeavy-duty electric truck: $8,000 for purchase; $5,000 for lease

Oregon: Up to $7,500

Oregon has two different programs. The Clean Vehicle Rebate Program provides rebates that range from $1,500 to $2,500. Rebates are available in the following amounts:

New EVs and FCEVs with a battery capacity greater than 10 kilowatt-hours (kWh): $2,500.EVs and FCEVs with a battery capacity of less than 10 kWh: $1,500.Electric motorcycles: $750.

Oregon’s Charge Ahead Rebate Program offers low- and medium-income Oregon residents an additional rebate of up to $5,000 for a total of up to $7,500 in rebates.

California: Up to $4,500

California’s Clean Vehicle Rebate Project (CVRP) offers rebates ranging from $750 to $4,500 for the purchase or lease of qualified vehicles. These rebates are available on a first-come, first-served basis to California residents.

Light-duty electric vehicles (EVs): $2,000Fuel cell electric vehicles (FCEVs): $4,500Plug-in hybrid electric vehicles (PHEVs): $1,000Zero-emission motorcycles: $750

Rhode Island: Up to $4,500

The Driving Rhode Island to Vehicle Electrification (DRIVE EV) rebate program offers rebates ranging from $750 to $2,500. Rebates are available in the following amounts:

ZEV (new all-electric vehicles and hydrogen fuel cell electric vehicles): $2,500ZEV (pre-owned vehicle): $1,500PHEV (new): $1,500PHEV (pre-owned): $750

Those who qualify for low-income can receive an additional rebate of $2,000.

Illinois: Up to $4,000

Illinois’ Environmental Protection Agency (IEPA) offers a $4,000 rebate that is reduced over time. Rebates are available in the following amounts:

Purchase or lease from July 1, 2022 to June 30, 2026: $4,000Purchase or lease from July 1, 2026 to June 30, 2027: $2,000Beginning July 1, 2028: $1,500

Pennsylvania: Up to $3,000

Pennsylvania’s Department of Environmental Protection (DEP) AFV Program offers rebates ranging from $500 to $2,000. Rebates are available in the following amounts:

EV (new or pre-owned): $2,000PHEV (new or pre-owned): $1,500CNG, Propane, and Electric Motorcycle (new or pre-owned): $500

Those who qualify as low income can receive an additional rebate of $1,000.

Maryland: Up to $3,000

Beginning July 1, 2023, Maryland residents who have purchased a qualified EV or FCEV can apply for an excise tax credit of up to $3,000. The tax credit is limited to one vehicle per individual and it is first come, first served.

Massachusetts: Up to $2,500

The Massachusetts Department of Energy Resources’ MOR-EV program (Massachusetts Offers Rebates for Electric Vehicles) offers rebates ranging from $1,500 to $2,500. Rebates are available in the following amounts:

All-electric and fuel cell electric vehicles: $2,500Plug-in hybrid electric vehicles: $1,500

New York: Up to $2,000

New York offers rebates of up to $2,000 for the purchase or lease of a new eligible EV.

All in all, the availability of tax incentives can make purchasing an electric vehicle much more affordable than it would otherwise be. Before taking out a car loan, make sure you do your research to maximize all the incentives you may qualify for. With the combination of the federal credits, state credits or rebates, and additional incentives from your local municipality or utility company, you can significantly reduce the cost of purchasing or leasing an electric vehicle.

When researching the available incentives and credits, you may not live in a state that qualifies for a credit or rebate, but there may be plenty of other incentives. For example, Tucson City offers a rebate of up to $500 for the installation of a Level 2 EV charging station. There are dozens more like it across the country. It is also important to note when certain incentives expire and conditions such as income limits or a cap on the cost of the EV. Some incentives are first come, first served so it pays to take advantage before they expire.

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