If you purchased a plug-in electrical car in 2018, you may be eligible for a tax credit – but not for long.
A federal tax credit of $7,500 was offered to purchasers of plug-in electric cars, but now that two car manufacturers – Tesla and GM – have sold more than 200,000 eligible vehicles in the U.S., the tax credit for purchasing those vehicles begins to phase out.
Both Tesla and GM passed this sales threshold in 2018. Therefore, the credit for buyers of Tesla cars will be $3,750 for plug-ins bought in the first half of 2019. On July 1, 2019, It will drop again to $1,875 for the remainder of the year. No credits will be available after Dec. 31, 2019.
The buyers of GM plug-ins will have until April 1, 2019, before the tax credit drops to $3,750. It will be reduced by 50 percent on Oct. 1, to $1,875. The last day to buy a GM plug-in and get a federal tax credit will be March 31, 2020.
Tesla has lowered prices on its plug-ins to partially offset the credit reduction and other carmakers may follow suit. Nissan is next in line to reach 200,000 in U.S. sales.
Lindsey Pierce, CPA, is a partner with Antares Group, Inc. She can be reached at firstname.lastname@example.org.