Update on Federal EV Tax Credits and the 2019 Filing Extension

With the annual tax-filing deadline extended to July 15, 2020 because of the COVID-19 crisis, new electric vehicle (EV) owners have an added cushion to claim the IRC 30D New Qualified Plug-In Electric Drive Motor Vehicle Credit (commonly referred to as the federal EV tax credit). This post will provide an update on the availability and amount of the federal EV tax credit and information on state incentives in Minnesota.

American taxpayers who purchased a qualified plug-in EV in 2019 are eligible to claim a federal tax credit from $2,500 to $7,500, depending on the vehicle’s battery capacity and how many EVs a manufacturer has sold. That’s because the tax credit is available until a manufacturer has sold 200,000 EVs. Once that cap is reached, the credit ramps down for the following four quarters and then phases out completely (see table 1).

Table 1: Section 30D tax credit phases out after 200,000 EV sales cap is reached

In a promising sign for EV adoption, reached the 200,000 per manufacturer sales cap in 2019. That means the amount of tax credit earned from purchasing a vehicle from either of those manufacturers has declined. Individuals who purchased a vehicle from Tesla or GM in 2019 will receive a partial credit depending on when they acquired¹ their vehicle:

• Tesla vehicles, including the Tesla Model 3, Tesla Model S, Tesla Model X, and others acquired between January 1 and June 30, 2019 qualify for a tax credit of $3,750.
• Tesla vehicles acquired between July 1 to December 31, 2019 qualify for a credit of $1,875.
• GM vehicles, including the Chevy Bolt, Chevy Volt, and others acquired between April 1 and September 30, 2019 will qualify for a tax credit of $3,750.
• GM vehicles acquired between October 1, 2019 through March 31 of 2020 qualify for a credit of $1,875.

Prospective or recent owners can visit the U.S. Department of Energy’s webpage for detailed information on qualified vehicles, including the tax credit amount and details on tax credit phase outs for manufacturers that have hit the cap.

State Incentives

During the fall of 2019, the Minnesota Department of Transportation rolled out a new incentive to complement the federal EV tax credit and encourage more drivers to switch to EVs:

• Drivers who purchase or lease a new or used plug-in EV between November 1, 2019 and October 31, 2022 are eligible to receive a one-time MnPass account credit for use in express toll lanes.
• Those who purchased or leased a plug-in hybrid EV receive $125 in credits.
• Those who purchased or leased a fully electric vehicle receive $250 in credits.

While people are driving much less during the current pandemic, this is a nice incentive once we are back on the roads. More information about receiving the Minnesota credits is available on the MnPass website.

While the COVID-19 crisis rightly has the focus of people across our state and country, Drive Electric Minnesota continues to find appropriate ways to encourage the deployment of EVs and the establishment of EV charging infrastructure through public-private partnerships, financial incentives, education, technical support, and public policy. You can read our legislative update published in April here. 

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1. Note: According to the IRS, “acquiring” refers to the date on which the title passes under state law.