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Navigating California's Electric Vehicle Incentive Programs

Navigating California's Electric Vehicle Incentive Programs

Here's everything you need to know about electric vehicle tax credits and electric car incentives in California.


5 min read

August 18, 2020

Opting for an electric vehicle (EV) is an awesome way to reduce your overall carbon footprint and save money at (and trips to) the pump, but who knew there were so many incentive programs to apply for after making the purchase? If you’re new to California’s electric vehicle incentives, you’re in luck because we’ve rounded up all of the most important programs to help you get some cash back in your pocket. So, before you head out on an eco-friendly road trip across the state, take a look at these money-earning electric car incentives.

What You Need To Know About Electric Vehicle Tax Credits and Incentives

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First things first: What are tax credits? Tax credits allow you to subtract a certain amount of money from what you owe in taxes—effectively paying you during tax season for making a positive impact. There are two kinds of tax credits: those that allow you to receive a refund if the amount is more than what you owe (refundable tax credits), and those that refund only up to what you owe (non-refundable tax credits). Here, electric-car tax credits are usually issued on a federal level, so you’re likely not going to find a California EV tax credit when you file. But don’t lose hope; the Golden State has plenty of other ways of rewarding you for buying a more eco-friendly car.

Unlike tax credits, which are claimed once your taxes are filed, rebates can typically be claimed after your purchase. Since you don’t have to wait for a specific time of year to claim them, rebates tend to involve shorter waiting periods before you receive the money. While tax credits typically come from the federal government, rebates are traditionally state-run, so don’t worry if you don’t find any federal electric car rebates; just be on the lookout for ones from California.

Finally, the state’s assistance programs offer grants and low-cost leasing options, which—similar to rebates—put money in your hands faster than tax credits do. Unlike rebates, however, these programs typically require that applicants submit their requests prior to purchasing a vehicle. 

Now that you know the various kinds of electric vehicle incentives available, it’s time to dive into the specifics.

Federal EV Tax Credit

The federal electric vehicle tax credit program provides a tax credit as high as $7,500.

Plug-In Electric Drive Vehicle Credit 

The Plug-In Electric Drive Vehicle Credit (30D) provides credit between $2,500 and $7,500 in nonrefundable tax credit for qualifying vehicles. All electric vehicles must have been purchased after December 31, 2009, and must acquire their energy from a battery that has a capacity of at least 5 kilowatt-hours. The exact amount you are eligible for is dependent on the battery capacity, with larger payouts granted to vehicles with longer battery lives in kilowatt-hours.

In addition, vehicles with two or three wheels that are powered by batteries with 2.5 kilowatt-hours or more—which can be recharged via an external source—may qualify under Section G. Vehicles that fall into this category must have been purchased between 2012 and 2013, but the owners must have started using the vehicle in the year that the EV tax credit was claimed. The maximum amount available in nonrefundable tax credit is $2,500 for these vehicles and is calculated as 10 percent of the purchase price (see IRS Section 30D for more information).

Alternative Fuel Infrastructure Tax Credit

While the majority of the Alternative Fuel Infrastructure Tax Credit verbiage is aimed toward fueling-station owners, homeowners benefit from a credit as well. Residents who buy qualifying residential fueling equipment—including electric vehicle charging stations—before the end of the calendar year might be eligible for a tax credit of up to $1,000 (see IRS Form 8911 for additional information). If you’re considering installing an electric charging station in your home, remember that the process will likely require obtaining local permits. 

“When city permits and inspections are involved,” says Steven Phillips, cofounder of A-EV Installs, “it takes a lot of experience and diplomacy to get things done on your behalf.” So, start planning now and call a reliable electrician if you’re interested in completing the work this year. 

How To Get A California Electric Car Rebate

Californians who buy or lease an eco-friendly vehicle can receive a rebate of up to $7,000.

Clean Vehicle Rebate Program (CVRP)

California residents who purchase or lease a new battery, plug-in hybrid, or fuel cell electric vehicle may be eligible for a rebate of up to $7,000. This program is limited to eligible vehicles and only applies to consumers under the specified income threshold ($150,000 for single filers; $204,000 for heads of household; and $300,000 for joint filers). In addition, consumers must apply for this rebate within three months of their purchase or lease in order to qualify—though eligibility alone does not automatically mean you will receive funds. 

This California EV rebate typically awards between $1,000 and $3,500 for plug-in hybrids; $2,000 to $4,500 for battery electric vehicles; and $4,500 to $7,000 for fuel cell electric vehicles. Funds for this program may become exhausted before the fiscal year ends, but applicants will be placed on a rebate waiting list in this case. 

PG&E’s Clean Fuel Rebate

PG&E customers who own electric vehicles (EVs) can benefit from a rebate of up to $800, offered as part of California's Low Carbon Fuel Standard program. This initiative aims to lessen the greenhouse gas emissions from transportation by encouraging the use of cleaner energy. The rebate, which is intended to promote the adoption of electric vehicles, can typically cover the cost of about one and a half years' worth of electricity for powering an EV. Additionally, it can be applied towards the installation of a home electric vehicle charging station, providing further incentive for EV owners to participate in this environmentally forward program.

Other Electric Car Incentives

Given the number of incentive programs available for EV drivers, consider purchasing the electric car of your dreams.

Clean Air Vehicle Decal Program

The Clean Air Vehicle Decal Program provides an opportunity for drivers who meet certain gross annual income and vehicle emission standards to use High Occupancy Vehicle (HOV) or carpool lanes regardless of how many people are in the car. This program aligns with the income criteria of the CVRP, setting the thresholds at $150,000 for single filers, $204,000 for heads of household, and $300,000 for joint filers. Those with incomes below these levels are likely eligible for both this decal program and the CVRP. Meanwhile, individuals with higher incomes may only qualify for the decal program or might have to choose between the two benefits, depending on their specific circumstances.

Additional programs—including the Clean Vehicle Assistance Program, Clean Cars for All, and Driving Clean Assistance Program—are also available for eligible residents, offering grants, affordable financing, and car replacement options. 

Now that you’ve got your incentives sorted, it’s time to purchase the Tesla Model Y you've been dreaming of and call A-EV Installs to put a charging station in your home. So, what are you waiting for? It’s never been easier to go green with an electric vehicle.

First image in body of article provided By Self Drive Vehice Hire 

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