Which Hybrids Are Eligible for a Tax Credit?


Quick Answer

Plug-in hybrid motor vehicles with a battery capacity of at least 5 kilowatt hours that owners bought in 2010 or after are eligible for tax credits, according to the Internal Revenue Service (IRS). Eligible vehicles must have a gross vehicle weight of less than 14,000 pounds and be bought new by the original owner, for use or lease, primarily in the United States. Additionally, they must be built by conventional manufacturers and not converted from standard vehicles to function on electrical energy, according to the U.S. Department of Energy.

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Full Answer

As of 2015, the amount of the credit is $2,500 plus $417 for the first 5 kilowatt hours of electric capacity, with an additional $417 for each additional kilowatt hour, up to a maximum of $7,500, as reported by the IRS. To claim the credit, vehicle owners must complete Form 8936, Qualified Plug-In Electric Vehicle Credit, and report it on the appropriate personal income tax return or general business credit form.

Once 200,000 qualifying vehicles of a particular make are purchased, the tax credit begins to phase out for that make of hybrid vehicle. The phase-out lasts for a year and begins the second calendar quarter after the quarter in which the vehicle reaches the sales limit. The IRS maintains sales charts of the quarterly sales of eligible vehicles, reports when manufacturers go over maximum sales levels and announces tax phase-out schedules on its website.

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