In an attempt to make switching to electric vehicles (EVs) more affordable, most states offer rebates, credits, and tax deductions to help aspiring EV owners save money.
In some states, these benefits also apply to other alternative fuel vehicles, like plug-in hybrid electric vehicles (PHEV), fuel-cell electric vehicles, and electric motorcycles. And no matter where they live, drivers can also save money by comparing quotes from multiple insurance companies when shopping for car insurance for their EV.
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Electric car incentives by state
Most states offer at least some kind of rebate, discount, or tax credit for drivers who purchase an electric vehicle. Kentucky, Montana, North Dakota, and Wyoming are the only states that do not currently offer any financial incentive for drivers who purchase an EV.
The chart below shows electric car incentives by state:
Keep in mind that things like laws and tax credits change over time, so it is important to verify any information about discounts, subsidies, and other benefits before purchasing an electric car.
→ Learn about the best and worst states to own an electric car
Types of electric car incentives
Each state has their own rules and regulations when it comes to helping you save money on an electric car. There are many different ways you can save money on the purchase of an electric car, including:
Tax credits: Many states offer a tax credit for new or pre-owned EV and PHEV, which means you’ll be able to subtract a certain amount from the total you owe in taxes.
Rebates: Some states provide rebates for the purchase of certain electric vehicles or accessories, like Level 2 EV chargers. Getting rebates for multiple purchases can save you an additional $1,000 or more on the purchase and set up of a new or used EV. For example, The Los Angeles Department of Water and Power (LADWP) offers a rebate of up to $1,000 for the purchase and installation of a qualified Level 2 (240-volt) charging station and a $250 rebate for the installation of a dedicated EV meter.
Electricity credits: In addition to tax credits and incentive programs offered at the state and federal level, many electric companies offer credits toward your electric bill or discounted rates for people who agree to charge their EV during off-peak hours. For example, qualified Alabama residents can get a discounted rate on their electric bill through an optional rate rider.
Exemptions: Some states may choose to offer an exemption from certain taxes or processes (like annual car inspections) rather than offering a tax credit or rebate.
→ Learn about the hidden costs of owning an electric car
Federal vs. state electric vehicle tax credits
Most states offer some benefits for drivers who purchase an electric vehicle, and those benefits can be combined with the electric car rebates and tax credits offered federally as part of the Inflation Reduction Act. Drivers who want to purchase an electric vehicle should check to make sure no changes or updates have been made to the law before making a purchase.
Some of the federal benefits offered for buying an electric vehicle are:
A $7,500 tax credit: The Inflation Reduction Act extended the previous $7,500 tax credit, but newer rules put some restrictions on the specific vehicles that qualify — for example, in order to qualify for the tax credit the EV must have had its final assembly in North America.
Incentives for EV manufacturers: As of Jan. 1, 2023, manufacturers will no longer be limited on incentives to the first 200,000 EVs sold, which means every qualifying EV purchased in 2023 should be eligible for a tax credit.
Rebates for used EVs: You could be eligible for a $4,000 tax credit if you buy a used EV for less than $25,000, but there are several qualifications that need to be met before you can claim the tax credit.
→ Learn about the best way to find electric car charging stations
Frequently asked questions
Can I still get the EV tax credit in 2023?
The Inflation Reduction Act extended the EV tax credit of up to $7,500 until December 2032, so you may still qualify for the EV tax credit for 2023. But there are some restrictions on the specific EVs that qualify — for example, the car in question had to have been assembled, at least partly, in North America.
Who is eligible for EV tax credit?
EV tax credit availability is based on a number of factors, including the type and price of your electric vehicle, your income, manufacturing restrictions, and whether your EV is new or used. The best way to find out if you are eligible for a tax credit is to review any applicable laws, including through the IRS and the Department of Energy.
What state has the highest EV rebate?
Utah offers the highest EV rebate, offering up to $15,000 back on your purchase, depending on when you purchase your electric car.
Is there still a government grant for electric cars?
Federal credits for upcoming EV purchases between 2023 to 2032 will be $7,500 for new vehicles and $4,000 for used vehicles, and will apply to the purchase of EVs, plug-in hybrids, and cars with hydrogen fuel cells.
