These Are The Electric Cars And Plug-In Hybrids Still Eligible For Federal Tax Credits

The 2022 Wrangler Rubicon 4xe is a plug-in off-road hybrid that can run for the first 22 miles … [+] solely on battery power.

With gas prices flirting with, and in a few areas exceeding the $4.00 per gallon threshold, buying or leasing a full electric (EV) or a plug-in hybrid (PHEV) car or SUV is a cost-effective way to save money at the pump, compared to driving a conventionally powered model.

The EPA says EVs can cost as little as $450-$500 a year to keep replenished with kilowatts, based upon 15,000 miles of combined city and highway driving and home charging at national average electric rates. That’s as much as $7,000 less than the average new vehicle owner will pay over five years to keep a gas tank filled. Ownership costs are even lower when you consider the fact that an electric car requires minimal maintenance and repair costs in that a battery powertrain has far fewer moving parts than a gas engine and automatic transmission, and doesn’t require fluid or belt changes and tune ups.

PHEVs come with a larger battery pack than a standard hybrid that allows them to run for a set number of miles solely on electricity. With most affording between around 25 and 60 miles on a full charge, some PHEV owners rarely use much gas at all.

Unfortunately, prices for electric and plug-in hybrid cars remain higher than their conventionally powered counterparts, though that gap is narrowing. Fortunately, the federal government and a number of states still remain willing to help sweeten the deal with financial incentives.

A one-time federal tax credit was established in 2010 to help get plug-in vehicles onto showroom floors and into consumers’ garages. Buyers of new EVs get to deduct the full $7,500 from their income taxes for the year in which the car is purchased. (Federal credits do not apply to used-EV sales.) That effectively brings the cost of a $27,400 Nissan Leaf down to a more affordable $19,900. For those leasing an electric car, the leasing company receives the tax credit and typically applies it directly to the transaction price, which lowers a lessee’s monthly payments.

Unfortunately, the federal tax credits are not permanent, and they’ve already expired for General Motors and Tesla, having since reached the 200,000-unit statutory limit for selling battery-dependent vehicles, including EVs and plug-in hybrids. The Biden administration has proposed extending the credits for all automakers and even increasing their amount if a given a vehicle is built in the U.S. and union labor is involved, but its enactment is thus far uncertain.

Several states and even some eco-minded cities offer their own incentives for EV and plug-in hybrid buyers that typically take the form of either a tax credit or a rebate. Provisions and exclusions are plentiful among EV incentive programs, so be sure to check your state’s Internet portal for details.

Things are a bit more complicated with plug-in hybrids, as the federal tax credit amounts for each model vary depending on the capacity of its battery pack. Here’s what’s being offered as of this writing for the 2022 model year according to the Environmental Protection Agency’s fueleconomy.gov website:

$7,500