Government subsidies have helped lower the price of EVs and has made them more attractive to the general public. But do you really understand EV subsidies as they stand right now? If not, we have a handy guide to federal and state incentives on electric vehicles for you.

Different countries and even different states have their own approach and no two systems are the same. The government also has a vast number of separate subsidies for the manufacturers themselves, that fall under the Zero Emissions Vehicle credits system.

Essentially Tesla gets four credits for every Model S it produces, which means it can sell the credits for up to $20,000 to other manufacturers to help them skirt fines.

This gets complicated, quickly, but for the sake of clarity we’ll focus on the consumer side of the equation here.

Federal Tax Credit for electric vehicles

Essentially, you get a $7,500 rebate off the retail price of your chosen EV thanks to new regulations drafted by the Bush Administration and carried forward by Barack Obama in a bid to get 1 million electric vehicles on the road by 2020. Thanks largely to Tesla, that might just happen.

But Tesla, perhaps alongside General Motors, will be the first to feel the brunt of the quota system.

How does the EV tax quota system work?

Every buyer is entitled to a $7,500 tax credit until the 200,000th EV is registered, then that triggers a complex phasing out of the credits that begins at the end of the following quarter. In the six months after that trigger, the subsidy will drop to $3,750. Then it drops to $1,875 for a further six months before the subsidy is removed.

With more than 400,000 pre-orders for the Model 3, Tesla will inevitably run into this problem and the general consensus is that the axe will fall on the subsidies in Q3 or Q4 of 2018. So consumers really can’t tell if they can access the full subsidy if they pre-order a Model 3 right now. GM could well run into the  limit at the same time, thanks to an aggressive marketing and production plan for the Chevy Bolt.

Once the company has registered the 200,000th car, it is still free to build as many cars as it can to qualify for the full subsidy, but it must register the cars within the time limits and production realities mean it simply cannot ramp up production to avoid this problem.

Could Donald Trump change the EV landscape?

There is another wildcard to consider, though, and that is President Donald Trump. This whole subsidy program was the work of previous regimes and Trump has not been shy about rewriting the rules. So, there is nothing to stop the current government extending, cutting or even abolishing the scheme.

It does seem harsh on both Tesla and GM that their willingness to drive the EV movement forward will be rewarded with a competitive disadvantage and there is every chance that the government will change the subsidy package to ensure that it is phased out at the same time for every manufacturer. The ‘anti-business’ rhetoric will be hard to ignore.

It seems a fairer system than forcing Tesla and GM to compete with others that simply didn’t take up the challenge to produce EVs until the infrastructure was in place. It’s what we expect to happen, but there will be a lot of debate and posturing between now and then.

So that’s the basics at a Federal level, but a number of States have their own rules and regulations too.

Check out this State-level guide to EV subsidies

Plug-In America has created a map that allows you fast access to your particular state’s EV incentives and you can access that here.

But for a quick rundown of the most EV-friendly states, here are the highlights:


Everyone thinks California leads the way with EV subsidies and, in some ways, it’s true. Colorado, though, is just as forward thinking and has a mass of subsidies for the EV industry as a whole. It also offers a much bigger tax break for buying the EV in the first place.

It also applies the subsidy to all vehicles powered by propane, hydrogen and electricity and this subsidy is an addition to the Federal tax break. That means you can potentially get up to $13,500 off the list price of an EV, which is a serious tax break.

The state offers income tax credits of up to $6,000, or 75% of the cost of the vehicle, for Plug-in EV purchases from. Other types of EVs get a $5,000 subsidy and even people who lease an EV will get a $2500 tax rebate.

Drivers can also apply for High-Occupancy Vehicle lane access, a variety of commercial and public buildings have EV only parking and there are subsidies available for charging stations too.


It’s a perplexing dichotomy that Illinois offers up to 80% of the cost of an EV as a tax rebate, but caps the amount at $4,000. When a $5,000 EV hits the market, though, Illinois will be the place to buy.


In Maryland, you’ll get up to $3000 of income tax credit when you buy a new EV. The State offers $125/KWh of battery capacity, so to qualify for the full amount you’ll need a 24kWh battery or above, which covers pretty much every mainstream EV on the market right now.

You also get HOV access, which could cut down on the pain of your daily commute and give you more of the most precious commodity known to man: time.


The Golden State has remained at the vanguard of the EV movement, building on decades of clean air incentives that included the wise decision to ban diesels. Now it trails in Colorado’s wake when it comes to EV incentives, but Californians still get a solid helping hand with their new car purchase.

Under the Clean Vehicle Rebate Project, you can get $2500 when you buy or lease a pure EV, $1500 for a Plug-in Hybrid and up to $900 off the purchase price of an electric motorcycle. Low-income households can also apply for an additional, discretionary $1500 grant.

Electric Vehicles also qualify for HOV lane access, utilities companies offer discount rate for off-peak charging and Sacramento and San Jose offer free public parking for EVs.


You might not think of Tennessee as leading the way when it comes to cutting edge tech, but it’s EV subsidy is just as strong as California’s. You can get $2,500 off the purchase price of your EV, in addition to the Federal tax credit, and up to $1500 off the price of a Plug-In Hybrid.


Capitol Hill has gone a different direction with EV subsidies and has waived the standard 6.5% sales tax for EVs. In the case of a Tesla Model S P100D, that’s a $9,100 saving on the $140,000 sticker price before the Federal tax break comes into effect.

So you can save $16,600 on the price of a range-topping Tesla and you’ll get a solid saving on cheaper cars too.

Plug-in Hybrids don’t get quite the same treatment. They only qualify for a 0.3% tax exemption.

South Carolina

You get a State-level $2000 rebate on an EV purchase in South Carolina, but not much else. Still, that’s a potential $9,500 off the purchase price of an EV and that is not to be sniffed at.


At first glance, Utah’s 35% rebate on the price of an EV seems like a sweet deal, but there’s a $1500 cap for EVs and $1000 for Plug-In Hybrids. The $2,500 rebate for an EV conversion looks appealing, but then converting an ICE car to battery power is probably not a home conversion that most of us should attempt.

Want more information on your specific state? Check out the Plug-In America map here.

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