The Tax Benefits of Purchasing an Electric Vehicle
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Buying an electric vehicle can be an investment, it’s true. Electric vehicles are consistently more expensive than other vehicles, but this is expected to drop over time as manufacturers find ways to make electric vehicles more affordable to build.
In the meantime, there are ways to find savings. In fact, you’ll get a break at the gas pump, since a 2020 study found that electric vehicle drivers spend about 60% less a year on fuel costs than gas vehicle drivers.
An electric vehicle will also get you tax benefits, which can save you significantly in the long run. So what are they? Let’s dive into it.
Purchase Incentives
Ready to purchase an electric vehicle? You’ll get a rebate at the time of purchase in the dealership to make it more affordable under the government’s Incentives for Zero-Emission Vehicles (iZEV) Program. If you purchase or lease a zero-emission vehicle, you could be eligible for the following rebates:
Business Use
Businesses can also take advantage of the tax benefits of electric vehicles. By using an electric vehicle for your business, you can get the same purchase or lease incentives but you can use it for up to 10 eligible purchases per year.
You can also choose instead to waive the purchase incentive and opt for a depreciation class for electric vehicles that can help you write off up to 100% of costs in the first year of ownership (up to $55,000 plus tax). Keep in mind, this is set to phase out over the next few years, so you’ll want to take advantage of this tax benefit now.
To figure out what your business is eligible for and to help guide you on the right choice for tax purposes, we can help.
The Bottom Line
Electric vehicles are the future, but they’re not yet as affordable as they eventually will be. In the meantime, there are tax breaks that can help put more money back in your pocket, whether for personal or business use.
Reach out today for the tax advice you need to ensure you’re making the right decisions for you and your small business.
- A passenger car with an MSRP (manufacturer’s suggested retail price) of less than $55,000 or a higher trim with a maximum MSRP of $65,000
- A station wagon, light pickup truck, SUV, minivan, van, or special purpose vehicle with an MSRP of less than $60,000 or a higher trim with a maximum MSRP of $70,000
- Battery-electric, hydrogen fuel cell, and longer-range plug-in hybrid vehicles (with an electric range equal or above 50 km) are eligible for up to $5,000
- Shorter range plug-in hybrid electric vehicles (with an electric range under 50km) are eligible for up to $2,500
Business Use
Businesses can also take advantage of the tax benefits of electric vehicles. By using an electric vehicle for your business, you can get the same purchase or lease incentives but you can use it for up to 10 eligible purchases per year.
You can also choose instead to waive the purchase incentive and opt for a depreciation class for electric vehicles that can help you write off up to 100% of costs in the first year of ownership (up to $55,000 plus tax). Keep in mind, this is set to phase out over the next few years, so you’ll want to take advantage of this tax benefit now.
To figure out what your business is eligible for and to help guide you on the right choice for tax purposes, we can help.
The Bottom Line
Electric vehicles are the future, but they’re not yet as affordable as they eventually will be. In the meantime, there are tax breaks that can help put more money back in your pocket, whether for personal or business use.
Reach out today for the tax advice you need to ensure you’re making the right decisions for you and your small business.