Incentives

Navigating EV Incentives in 2022

February 8, 2022

Emission-Free Driving Saves You Money

Zero-emission vehicles are contributing to a better environment and cleaner air for us all. But did you know by driving an electric vehicle could save you thousands of dollars? Over the course of several years, driving an EV will not only save you the hassle of visiting gas stations, but the more miles you drive, the more you’ll save by simply avoiding the pump. It is possible to save money AND reduce your carbon footprint.

Even better, there are literally hundreds of incentives available across the country that are saving people thousands of dollars on the purchase of an electric vehicle. There's even incentives available to help pay for the cost of installing home charging equipment. Federal, and most state and local authorities, provide financial incentives for EV purchasers, and many electrical providers offer additional support for EV drivers in the form of favorable rates for charging electric cars during off-peak hours.

Next, let's dive into what's new for 2022 and explore what's changed surrounding EV incentives.

What’s New for 2022

Just as the technology in electric and plug-in vehicles is evolving very quickly, so are the incentives available to EV purchasers. Just recently, the U.S. House of Representatives passed President Biden’s “Build Back Better” bill, which includes an EV tax credit of up to $12,500, available for vehicles built in the U.S.; it has yet to be passed by the Senate. If passed, it would replace the current federal incentive structure, detailed below.

The new tax credit starts with a base amount of $4,000, as it is today, with another $3,500 available if the vehicle’s battery pack includes at least 40 kwh of capacity – for cars placed in service before 2027. Another $4,500 is available if an automaker makes the EV in the US – with a union workforce. Another $500 is added for a US-made battery. Currently, the only cars that would qualify for the full $12,500 are the Chevrolet Bolt EV and Bolt EUV.

If you’re in the market for an electric vehicle, the challenge can be understanding all of the incentives that could potentially be available to you as the EV landscape continues to evolve. To maximize your potential financial gains, it pays to take a systematic approach based on the vehicles you are considering, and where in the country you live.

Most incentives require an application or submission process that can take weeks or months after the purchase of your electric vehicle, so don’t plan on saving the money up-front; rather, think of the incentives as an additional benefit of driving a clean vehicle and helping the environment. Keep researching the incentive landscape here on GreenCars as well as other sources to make sure you maximize your returns.

Up to $7,500 in Federal EV Incentives

The easiest incentives to research are federal tax credits. The U.S. Department of Energy has a very simple tool that lets you look up the model of electric vehicle you are considering to determine the credit available.

Federal credits are based on a vehicle’s battery capacity, and how many electric vehicles a manufacturer has sold. Therefore, some car companies, including Tesla and General Motors, that have already delivered over 200,000 units, no longer have credits available for purchasers – something that may impact your decision on which vehicle to buy.

Available not just for pure-electric vehicles, but also for plug-in hybrids, there are some surprises in the federal incentive list. For instance, the Ferrari SF90 supercar, with three electric motors and a powerful V8, qualifies for the full $7,500 credit, as does the plug-in hybrid Jeep Wrangler off-roader. The McLaren Artura, with a hybrid V6 powertrain, nets you $4,585. Many large, powerful luxury SUVs with plug-in hybrid technology come with large tax credits as well.

Given that incentives are reduced when their manufacturers hit certain sales thresholds, and go away altogether past 200,000 units, it actually pays to purchase an electric vehicle or plug-in hybrid now. You apply for the federal incentive with Form 8936 from the IRS; take the total from that form and include it in form 1040, your annual tax return.

State EV Incentives

Depending on where you live in the United States, additional incentives are available from state governments. Some states offer financial support for pure-electric vehicle purchasers. For instance, New York has credits of up to $2,000 on over 60 individual EV models. California offers up to $4,500 for fuel cell electric vehicles, $2,000 for EVs, and $1,000 for plug-in hybrids.

Most states also offer rebates and credits towards the installation of electric vehicle supply equipment (EVSE). Since you’ll get the best EV experience anyway by having a home charger, it makes sense to take advantage of these credits. Depending on the state, the credits may apply to both the charging equipment – such as a wall-mounted charger – itself, costs incurred for its installation, or both. Amounts vary by state, but average around $1,000 to $1,500, with some states offering more.

The best way to research the most current incentives is through the EV Incentives tool on GreenCars, which is updated constantly and in accordance with the U.S. Department of Energy.

An additional non-financial advantage to buying a plug-in hybrid or electric vehicle is access to high-occupancy vehicle (HOV) lanes in many states – even if you’re driving by yourself. Ask yourself what your time is worth, and how much time you spend sitting in traffic, and you’ll realize you could save even more by going electric!

Local EV Incentives

Once you’ve made note of what might be available to you from a federal and state level, it’s time to research what’s available in your local market – which can vary significantly based on where you live. Many city governments also offer EVSE incentives, which may or may not be combined with state incentives depending on the location. Some cities, such as Long Beach, CA, even offer EV buyers free home chargers!

Check on your local municipality’s website about green parking initiatives where you live and work. Cities like Nashville, Miami Beach, Cincinnati, and others, offer free parking, or substantially reduced rates, at city lots – and those lots usually have preferred parking spaces for EVs with charging stations.

The company that provides power to your home may also offer advantageous rates for charging your vehicle during off-peak hours, which can save you even more – on top of the savings you get using electricity instead of gasoline.

Where Do You Go From Here?

As you can see, there are many ways to benefit financially by purchasing an electric or a plug-in hybrid vehicle depending on where you live. And incentives are updated on a regular basis. In addition to checking federal, state, and local websites, the GreenCars incentive tool lets you enter your location and choose the vehicle you are considering to provide you a picture of the incentives that might be available.

No matter what vehicle you choose, however, and where you live, driving electric helps reduce greenhouse gas emissions, saves you money on fuel in the long run, and contributes to a better world.