Once upon a time, any “hybrid vehicle” would qualify the owner for a generous income tax credit and give the owner authorization to drive in carpool lane without a passenger, without fear of getting a ticket.

Current Tax Benefits

But now in 2019, in order to get both of these favorable benefits, the owner of car must buy a super ultra-emission car. Essentially this means the car must be electric vehicle.  Liquified petroleum gas (“LPG”) and compressed natural gas (“CNG”) cars also qualify.  I will focus on the electric vehicles below.

The owner of a Tesla would get a federal credit of $3,750 (for cars acquired January 1 to June 30, 2019) or a credit of $1,875 (for cars acquired from July 1 to December 31, 2019). Other electric vehicles still qualify for the full $7,5000 federal tax credit https://www.edmunds.com/fuel-economy/the-ins-and-outs-of-electric-vehicle-tax-credits.html.

Refueling Demand

But as most people know, the big problem with these cars is range anxiety.  These cars must have the electricity recharged before hitting the maximum miles driven for that type of vehicle. Unlike a traditional combustible car engine that can be refueled in 5 to 10 minutes, it could take as many hours to recharge these types of vehicles in lower voltage situations. Fortunately, there are now many recharging stations with higher voltage, which could charge a car in as little as 30 minutes.

Congress several years ago enacted legislation which gives a business owner a federal tax credit for the smaller of 30% of the cost of the depreciable refueling property or $30,000 per location. The depreciable basis must be reduced for the credit claimed.

If a homeowner who owns an electric vehicle and installs a new EVCSE at their main home to recharge the car’s battery they will get a federal tax credit of the lower of $1,000 or 30% of the installation cost.

You should talk to your CPA about these potential benefits to determine how they would apply to your situation.