These 7 States Will Give You Money to Buy an EV

The federal government isn’t the only one handing out money to potential EV owners. Many states have additional tax credits worth thousands of dollars that you can stack on top of the federal rebate.

The federal electric vehicle rebate — worth up to $7,500 — could be enough to entice many drivers to make their next car an electric one.

Together with a state incentive, you can save more than $15,000 on the purchase of an electric car, depending on where you live. However, it is not always easy to find out what you qualify for. “These incentives are not just a Google search away,” said Peter Glenn, founder and co-CEO of EV Life, an EV financing platform.

We’ve got you covered. Here’s what you need to know about EV tax credits at the state level.

How do EV tax credits work?

A tax credit is usually structured as a rebate. That means you pay the full price up front and get the discount later when you file your taxes.

The federal government’s EV tax credit is an exception because car dealers are allowed to deduct the rebate from the sticker price, saving you the hassle of applying for the rebate later.

How it works at the state level depends, well, on the state. Before we get into that, let’s take a closer look at the federal tax credit.

How does the federal EV tax credit work?

The federal government is offering car buyers up to $7,500 off the purchase of an electric car.

New electric vehicles may qualify for the full $7,500 credit or a partial $3,750 credit. There is also a similar tax credit of up to $4,000 for used electric vehicles.

The rules for which a car qualifies are a bit complicated. It depends on which specific car model you buy, where it was manufactured and how much it costs. You can see the full list of which vehicles are eligible (and for how many) on this official government website.

And as previously mentioned, this tax break is unique because participating car dealers can apply the rebate at the point of sale, eliminating the need for the buyer to file paperwork for a tax credit.

Which states have the best EV incentives?

On top of that federal incentive, many states are now offering (or considering) additional rebates to make electric vehicles more affordable.

Here is a list of the most generous EV rebates currently available at the state level.

1. Colorado

“There’s a lot of money on the table in Colorado,” Glenn said. The state is offering up to $7,500 off the purchase of a new electric vehicle. To qualify for the full credit, the EV’s sticker price must be less than $35,000; cars between $35,000 and $80,000 may qualify for a smaller credit of $5,000. You can read more about the details and participation rules here.

2. Maine

The state of Maine is also offering up to $7,500 off a new EV purchase for residents who meet certain income requirements. Those earning higher incomes may qualify for a $3,500 partial credit. And the state also has an “any income” rebate worth up to $2,000.

3. Massachusetts

While not as generous, Massachusetts also has a range of discounts available. The best incentive is a $3,500 rebate for the purchase of a new or used electric car. Lower rebates of $1,500 and $1,000 are available if you trade in a gas car for an electric car (via purchase or lease).

4. Maryland

Maryland currently offers drivers up to $3,000 off the purchase of electric vehicles costing less than $50,000. There are a few terms and eligibility requirements involved, which you can view here. The state also offers a 50% discount on the cost of a home charger installation, up to $700.

5.Delaware

The electric vehicle rebate in Delaware is worth up to $2,500. You can view the list of eligible vehicles on the state’s website. You can claim the rebate at the dealer – similar to the federal credit – or apply for it afterwards.

6. New York

In New York State, the Drive Clean Rebate can give residents up to $2,000 off the purchase or lease of a new electric car. Here’s the full list of cars eligible for the New York discount. This credit can also be deducted from the car’s sticker price at participating dealers.

7. California

While California pioneered EV rebates at the state level, there is less money available to residents now than there used to be, Glenn said. The California Clean Vehicle Rebate Project closed in November 2023. That said, some of the major metro areas in the state have their own rebates, such as a $2,000 rebate for income-eligible Peninsula Clean Energy customers.

Why are some states more EV-friendly than others?

Often, the states that are most generous to electric vehicle buyers are those that support clean energy more broadly. But Glenn said it also comes down to air quality: Many states justify their EV rebates in terms of potential air quality improvements by taking gas-powered vehicles off the road.

In addition to the seven states mentioned above, there are many more with programs awaiting more funding or considering new EV rebates. “There are always new states coming on board,” Glenn said.

There are online tools to help you search for your state’s EV incentives. Glenn’s company, EV Life, is just one of many options. Another is the U.S. Department of Energy’s state-level search tool that allows customers to view current state incentives for EVs, HEVs (hybrid vehicles), and PHEVs (plug-in hybrid vehicles).

Some states Glenn said should be watched include New Jersey, Oregon, Texas, Illinois, Washington and Minnesota.

What local EV incentives are available?

Believe it or not, federal and state programs are not the end of the free money available for purchasing electric vehicles. Many local governments and utilities are offering even more incentives for electric vehicles.

The U.S. Department of Energy also offers the option to search by utility to see which EVs, HEVs, and PHEVs qualify for local incentives.

You can also check with your city or electricity supplier to see if they might have additional rebates that you can stack on top of the federal and state tax credits.

“There’s just a whole world of possibilities,” Glenn said.

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