Plug-in Electric Vehicles

• If you purchased a new plug-in electric vehicle after December 31, 2009, you may be eligible for a tax credit of between $2,500 and $7,500, as of the time of publication. To qualify, the electric vehicle must have at least four wheels, weigh less than 14,000 pounds and have a minimum four kilowatt hour, rechargeable battery. Vehicles with higher battery capacities receive higher tax credits.
  
  

Hybrid-Vehicle-Conversion Credit

• Although owners of hybrid vehicles can no longer receive tax credits as of 2010, if you convert your hybrid to an electric vehicle, you can qualify for a maximum $4,000 credit. This includes owners who claimed the hybrid vehicle tax credit prior to its expiration. The credit is equivalent to 10 percent of the total cost of converting your hybrid vehicle to a plug-in electric vehicle. The converted vehicle must have been first used after February 17, 2009. The credit does not apply to vehicles converted after December 31, 2011.
  
  

Other Qualifying Electric Vehicles

• Two- and three-wheeled plug-in vehicles also qualify for a credit of up to $2,500, if purchased between February 17, 2009 and January 1, 2012. Low-speed vehicles with electric motors that utilize a four kilowatt hour or 2.5 kilowatt hour battery capacity qualify.
  
  

Considerations

• It is important to note that for plug-in electric vehicles, the full credit amount will begin to decrease once your manufacturer has sold 200,000 of your car's vehicle model. The sooner you buy a newly qualifying vehicle, the more your credit will be. To properly apply for this tax credit, you will need to use IRS form 8834 for residential electric vehicles. If you have this type of vehicles for a business, you should use IRS form 3800.