Car Tax Credit

On this page you'll find a listing of vehicles that qualify for a federal tax credit. If our list of current programs looks a little short, it's because the tax credits that were previously available for hybrids, clean diesels, and natural gas vehicles all expired on December 31, 2010. The remaining credits are available for plug-in hybrids and electric vehicles (EVs). These federal incentives are offered to encourage people to buy more fuel-efficient or alternative-fuel cars. Typically, these cars are more expensive and the tax credit is designed to offset that extra cost.

Credits begin to phase out for a manufacturer once it sells 200,000 vehicles. When this happens, the credit is reduced by 50 percent. The credit will then drop another 25 percent in the fourth calendar quarter after the 200,000 number has been reached and be completely phased out roughly six months later.

The federal tax credits listed here can be used only by the original owner. The credit will be given to consumers after they file their taxes the following year. Keep this in mind when planning out a future purchase. Automakers are quick to tout the credits in their advertising, and they might sound as if it were an instant rebate. But at the time of purchase, you will have to finance and make monthly payments on the full price of the vehicle.

If a vehicle is being leased, the automaker may claim the credit, and may pass the savings on to the consumer. (In the case of the Chevrolet Volt and Nissan Leaf, both manufacturers say they will factor the credit into a special lease rate.) Additional tax credits, deductions and incentives may be available from state or local agencies.

Current Programs

Expired Programs