Electric Vehicle Tax Credit
A tax credit for the purchase of qualified electric vehicles is provided under Section 179A of the Energy Policy Act of 1992; it was extended through 2007 by the Working Families Tax Relief Act of 2004. IRS Form 8834 can be used to calculate the credit for qualified electric vehicles placed in service. The credit amount equals 10% of the cost of the vehicle up to $4,000. This credit is scheduled to be reduced by 75% in 2006 and expire in 2007. To qualify for the credit, the vehicle must be powered primarily by an electric motor drawing current from batteries or other portable sources of electricity. All dedicated, plug-in-only electric vehicles qualify for the tax credit, which is available for business or personal vehicles. A tax deduction of up to $100,000 per location is available for qualified electric vehicle recharging property used in a trade or business.