Navigating Electric Vehicle Tax Benefits in California

It’s becoming increasingly clear that the world needs to move away from dirty and pollutant combustion-engine vehicles and embrace electric technology. However, the process is relatively slow, as millions of drivers need to replace their old vehicles with new ones. Accelerating this process requires financial incentives at both a federal and state level, with California leading the way in promoting electric vehicles as part of a cleaner and more sustainable way of life. Keep reading to learn more about how you can benefit from significant incentives when buying a Hyundai in California.

Federal Tax Credits

Electric vehicle buyers from all over the country can get up to $7,500 in the form of a federal tax credit, depending on factors like the car’s battery capacity, your household income, and whether the vehicle is new or used. The two types of credit are:

New Clean Car Credit

This applies to fuel cell and plug-in electric vehicles and can help you save up to $7,500 on your new car purchase. You’ll have to buy it for personal use and drive in U.S. territory most of the time to qualify. The maximum income that makes you eligible is:

• $300,000 for married couples who file together.
• $225,000 for heads of households.
• $150,000 for everyone else.

Used Clean Car Credit

You can also get a tax credit of up to $4,000 if you buy a used EV from a certified dealership. The car must cost less than $25,000. The income limits for this tax credit are:

• $150,000 for married couples who file together.
• $112,500 for heads of households.
• $75,000 for everyone else.

How to claim EV federal tax credits

If you’re eligible for either the new clean car credit or used clean car credit, you can file Form 8935 when filing your federal income taxes. You can also transfer the tax credit to a dealership and get a direct discount on your EV purchase, which may be the more convenient alternative. If you’re claiming it on your tax return, you need the following information:

• The seller’s name and taxpayer identification number (TIN).
• The buyer’s name and TIN.
• The date of the sale and the car’s purchase price.
• A verification of the vehicle’s eligibility for tax credit.
• Information regarding the vehicle’s battery capacity (it should be at least seven kilowatt hours)
• The vehicle’s identification number
• A confirmation that the buyer is the primary vehicle user
• A statement of declaration from the seller

If you choose to transfer the tax credit to the dealer for a direct discount, you must show the dealership your photo ID and taxpayer identification number. You also need to provide or confirm the following:

• You meet the income-based eligibility criteria.
• You confirm that the car will mostly be for personal use.
• You agree to pay the IRS any accepted rebate amount if your income is above the eligibility threshold.
• When filing the tax return for the tax year in which you bought the vehicle, you’ll include the vehicle’s identification number and date of purchase.
• You confirm that you voluntarily chose to transfer the credit.

Although Hyundai models don’t yet qualify for federal tax rebates, Hyundai is offering a similar $7,500 discount for the IONIQ 5, IONIQ 6, and Kona Electric.

California Local and State Rebates

There are also local and state-wide incentives for electric vehicle buyers. The Clean Vehicle Rebate Program (CVRP) was the most popular but was suspended on November 8th, 2023. Others have taken its place, including charging station rebates that utility providers offer individuals and businesses that wish to install charging stations.

The Clean Cars 4 All Program gives lower-income California citizens from select areas the chance to replace their old gas-powered vehicles with new, less pollutant alternatives. It allows participants to buy new or used EVs, hybrids, and plug-in hybrids, as well as alternative vehicles like bikes, scooters, and even vouchers for public transportation. This program is slightly different based on the region in which you live and is divided into four different sub-programs:

Replace Your Ride

Residents of the South Coast Area, including Los Angeles, are eligible for this program. It enables participants to receive up to $9,500 to replace their old combustion-engine vehicle with a new, more eco-friendly alternative. Income criteria depend on multiple factors, such as the number of people in the household and their income level. The old vehicle must be a 2007 model year or older, be registered in California, and be fully operational, among other criteria. 

Clean Cars For All

This program covers low-income individuals living in the Bay Area. Participants can get up to $12,000 for their old vehicles when purchasing new electric ones. To participate, you must complete an application that confirms that you live in the Bay Area, your household income is below the maximum allowed for this program, and your vehicle is eligible (the vehicle eligibility criteria are the same as for the Replace Your Ride program). An authorized dismantler will verify your old vehicle, and you can then go to a dealership and buy a new sustainable vehicle.

Drive Clean in the San Joaquin

San Joaquin Valley residents with modest incomes can use this program to upgrade their vehicles. The maximum available sum is $12,000, and the main eligibility factor is having a household income below 300 percent of the federal poverty level. Your vehicle also must be from 2006 or older.

Clean Cars 4 All

This program is available for low-income residents in the Sacramento area. The maximum sum you can get when buying a new or used EV is $9,500. The income eligibility criteria depend on your annual income and the number of residents in your household. Your vehicle must be from 2009 or older.

Get a Sustainable Electric Vehicle From Dublin Hyundai

Here at Dublin Hyundai, we’re committed to keeping our air clean and want to help you gain from the electric vehicle tax benefits in CA. Our staff can help you understand how switching to an electric vehicle does the environment a favor by reducing transportation costs and enhancing your lifestyle. Contact us today, or come visit us.

a white car parked in front of a building by Hyundai Motor Group is licensed with Unsplash License

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