Federal Electric Car Tax Credits In 2021 Can Save You Thousands

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Car buying is going downhill right now.

Chip shortages have led to a reduction in the supply of new vehicles, which has pushed up prices for new and used cars.

When it comes to buying a car, knowledge is power. What started out as a 2021 Toyota Prius Prime LE with an MSRP (Manufacturer’s Suggested Retail Price) of $ 28,220 ended up costing me $ 18,539 after factoring in discounts and credits. The Prius Prime is a semi-electric vehicle that runs on battery power before the gas goes off.

Here is what I found from my research and how I was able to save money when buying my car:

State’s clean car programs lost $ 4,500

National clean car programs require that a certain percentage of cars sold by a manufacturer be electric or zero emission vehicles.

These states have clean car programs in place:

  • Colorado
  • Connecticut
  • Maine
  • Maryland
  • Massachusetts
  • new York
  • New Jersey
  • Oregon
  • Rhode Island
  • Vermont
  • Virginia
  • Washington

If you live in one of these states, you’re in luck.

As a result of these programs, electric car makers struggling to meet their quota for the year have cut some cars. If they are not able to sell their target amount of cars, they have to buy these credits from other companies. The dealership I went to was discounting the Priuses at about $ 4,500.

Even if you don’t live in one of these states, you just need to be able to travel to one of them. For example, I live in Washington, DC, but hitchhiked to Maryland to buy my car. Totally worth the cost of the Uber.

“I had a lot of out-of-state customers traveling to take advantage of the savings,” said Sam Rhee, dealer at Heritage Toyota in Catonsville where I ended up buying my Prius.

â–ºToyota’s investment in electric vehicles: Toyota to build US $ 1.3 billion battery plant for electric and hybrid vehicles

Additional tax credits for electric cars vary from state to state, and energysage.com has a list of ways to save money on electric vehicles organized by state along with links to each legislation. . For example, Massachusetts offers discounts of up to $ 2,500 to customers who buy or lease a plug-in electric vehicle, and Maryland offers individuals $ 700 for the cost of acquiring and installing charging equipment. qualified.

The US Department of Energy has also created an interactive map to help car buyers identify state laws and incentives related to alternative fuels and advanced vehicles.

Federal Electric Vehicle Tax Credits Give You Back Up To $ 7,500

For the past ten years or so, the federal government has been trying to encourage the adoption of electric vehicles, thereby granting subsidies in the form of tax credits, up to a maximum of $ 7,500.

At fueleconomy.gov, you can search for your car and see how much you can save for a particular model and make.

For my car, a 2021 Toyota Prius Prime, I’ll save $ 4,502 in tax refunds at the end of the year.

The subsidy applies to electric, plug-in hybrid and fuel cell vehicles, and it only counts for new cars, not used or leased cars.

Choosing the right time to visit the dealership can save thousands of dollars

The best time to walk into a store is when they are trying to empty inventory. Often times, it’s the end of the month when they’re trying to empty inventory or when automakers are pressuring dealerships to clean up the lots and make way for the new models coming out.

“As these technologies evolve, they [car manufacturers] want to bring these new features and, in many cases, longer runtime batteries to customers, ”says Stacy Noblet, senior director of transportation electrification at ICF, a global consulting agency.

â–ºCar buying is done online: Pandemic disrupts dealer visits for new cars, trucks and SUVs

â–ºThe shortage of electronic chips explained: How it affects car prices and the tech industry

Toyota is not alone in offering discounts.

“Nissan actually did a big program a few years ago with the Leaf, where they partnered with utilities and other specific organizations to drastically reduce the Leaf from the previous year so they could move them around a lot. “said Noblet.

At the dealership I went to, there was a $ 1,500 rebate on top of the incentives.

TLDR: the grand total

All discounts can be difficult to follow. To sum up, the calculations looked like this for the final price of the car I got.

Starting MSRP: $ 28,220

– Dealer discount: $ 1,500

– Toyota rebate: $ 4,500

= Sale price: $ 22,220

– Federal tax credit: $ 4,502 (applied when filing your income tax return)

= Net cost: $ 17,718

On top of that, if you finance with Toyota, you can get $ 500 on your car loan. Depending on how quickly you pay it back, the loan can actually save you money.

Overall, even if you sold the car in a few years, you would probably recoup most of the cost of the car since you paid a fraction of the total cost.

â–ºEV buying tips: Tired of paying for gasoline? Here’s what to look for when buying your first electric car

â–ºThe aspirations of the electric vehicle in public and private industry: What You Need To Know About Electric Vehicles As President Biden, Automakers Announce Electric Vehicle Goals

Michelle Shen is Money & Tech digital reporter for USA TODAY. You can reach her @ michelle_shen10 on Twitter.

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