In the United States, federal laws already allow significant income tax deductions that apply to new vehicles, such as the upcoming Nissan Leaf.   According to IRC 30D, purchasers of electric cars are allowed a basic tax deduction of $2,500 and vehicles with larger battery packs can provide tax savings up to $7,500.  Those who modify a gas guzzling car into a vehicle capable of operating with electric charge qualify for a tax benefit of $4,000.  Overseas in the UK, government grants provide up to £5,000 to buyers of ultra-low carbon hybrids, or plug-ins.

So what about the States?

Depending on the state in which you live, tax incentives can vary wildly.  For example, California‘s Clean Vehicle Rebate Project allows rebates up to $5,000 for low-carbon cars and up to $20,000 for commercial trucks.

Washington car buyers are exempt from paying sales taxes on electric and fuel-cell powered cars.   Converted cars are eligible for tax credits as well.

The state of Tennessee, choosing to go in an interestingly different direction, is offering free charging equipment to plug-in owners who need to refuel at home.  As of now, however, only certain cities are eligible.

Florida provides special financing arrangements for those who wish to install charging equipment on their property.   Residents or businesses in the Orlando metropolitan area can apply for free charging equipment from Coulomb Technologies.   All electric vehicles are allowed on the High Occupancy Vehicle (HOV) Lane.

To learn more about the wide variety of rebates, grants, and credits that might be offered in your state, the Department of Energy breaks down the laws and tax incentives.  As you can see in the table, certain states are way ahead of others (ahem, California) in the subsidizing game… for better or for worse.

These laws are fluid, and they are certainly going to be amended and updated once the plug-in rollout hits full speed.  In determining whether to opt for an electric car, price is obviously a major consideration for consumers.  Whether it trumps performance, and more importantly, convenience, is another question.  It seems, however, that all these considerations are at least being worked on.

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Along with Plug In America, another non-profit group, CalCars.org,  and various hybrid and plug-in manufacturers formed a coalition to encourage (successfully) greater tax credits and infrastructure stipulations within the plan signed by President Obama.

Read the whole statement here.

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Green Car Advisor has delved a bit further into the Economic Recovery and Reinvestment Act of 2009, revealing many of the numbers that were designed to jumpstart the product of hybrid and electric vehicles.

Conventional hybrid manufactuers will continue to enjoy a $3,400 tax-credit for their first 60,000 hybrids, followed by a %50 drop each of the following 6 months.   Of course, companies like Toyota have already used up all of these tax-credits, while General Motors still has its full reserve available.

State sales taxes for the purchase of hybrid cars can be written off as federal income tax deductions.  This provision applies to other fuel-efficent vehicles, and interestingly, includes purchases of  Dodge Rams , Lincoln Navigators and Hummers (?).

Plug-in Vehicles enjoy the largest bounty of the Recovery Act, with tax credits going as high as $15,000 per vehicle.   The deductions are tiered according to the capacity of the vehicles battery pack and the weight of the vehicle itself.    Eligible vehicles must be powered by a battery pack with at least 4 kilowatt-hours to qualify for a $2,500 tax credit.  Each extra kilowatt-hour of capacity qualifies for an extra $417 credit, with cars under 10,000 pounds topping out at $7,500.  According to the article, “For vehicles weighing from 10,001 pounds to 14,000 pounds, the maximum credit is $10,000; it jumps to $12,500 for 14,001- to 26,000-pound vehicles; and tops out at $15,000 for vehicles in excess of 26,000 pounds.”

Interestingly, the growing popularity of aftermarket conversions of hybrid cars , such as the Toyota Prius, into plug-ins with all-electric range, can qualify the owner for a 10%  (of conversion cost) tax savings — up to $4,000.   Even electric motorcycles and low speed electric vehicles (EVs) qualify for a $2,500 credit.

There are also billions in the stimulus package dedicated to providing the sort of technology and infrastructure needed to convert America’s automobiles into less gas-dependent resources.

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