Your State May Be Giving Away Extra Incentives to Buy an EV

The federal rebate for electric vehicles — worth up to $7,500 — could be enough to sway many drivers to make their next car an EV. But the federal government isn’t the only one handing out money to would-be EV owners. Many states have additional tax credits worth thousands of dollars that you can stack on top of the federal discount.

Taken together, you could save more than $10,000 on the purchase of an EV, depending on where you live. However, it’s not always easy to figure 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 finance platform.

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

How do EV tax credits work?

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

The federal government’s EV tax credit is an exception, as car dealerships are allowed to take the discount off the sticker price, saving you the hassle of filing for the rebate later.

How it works on a 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 EV.

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

The rules for which credit a car qualifies for are a bit complicated. It depends on which specific car model you’re buying, where it’s manufactured and how much it costs. You can view the full list of which vehicles qualify — and for how much — on this official government website.

And as mentioned earlier, this tax credit is unique in that participating car dealers are able to apply the discount at the point of sale, eliminating the need for the buyer to file paperwork for a tax rebate later.

What states have the best EV incentives?

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

Here’s a list of the most generous EV discounts available at the state level right now.

1. Colorado

“There’s a lot of money on the table in Colorado,” Glenn said. The state offers 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 can qualify for a smaller credit of $5,000. You can read more about the details and eligibility rules here.

2. Maine

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

3. Massachusetts

Though not quite as generous, Massachusetts also has an array of discounts available. The best incentive is a $3,500 rebate for the purchase of a new or used EV. There are lesser rebates of $1,500 and $1,000 available when you trade in a gas-powered car for an EV (through a purchase or lease).

4. Maryland

Maryland is currently offering drivers up to $3,000 off the purchase of EVs that cost less than $50,000. There are a few strings attached, and eligibility requirements, which you can view here. The state also offers 50% off the cost of a home charger installation, up to $700.

5. Delaware

Delaware’s electric vehicle rebate 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 dealership — similar to the federal credit — or apply for it after the fact.

6. New York

In New York state, the Drive Clean Rebate can get residents up to $2,000 off the purchase or lease of a new EV. Here’s the full list of cars that qualify for the New York rebate. This credit can also be taken off the sticker price of the car at participating dealerships.

7. California

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

Why are some states more EV-friendly than others?

Often the states that are most generous to EV buyers are states 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 improvements to air quality from taking gas-powered vehicles off the road.

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

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

Some states to keep an eye on, according to Glenn, include New Jersey, Oregon, Texas, Illinois, Washington and Minnesota.

What local EV incentives are available?

Believe it or not, federal and state programs aren’t the end of the free money available for EV purchase. Many local governments and utility companies offer even more incentives for electric vehicles.

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

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

“There’s just a whole world of opportunity out there,” Glenn said. 

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