State tax incentives for electric vehicles and charging stations | Wipfli

As the world moves toward greener and more sustainable energy solutions, many states are offering tax incentives to encourage the adoption of electric vehicles (EVs) and the expansion of EV infrastructure. These incentives come in the form of exemptions and credits for both sales tax and income tax.

Sales tax exemptions and rebates

Electric vehicles: Some states provide sales tax exemptions for the purchase of electric vehicles. For example:

• New Jersey offers full sales tax exemptions on new EV purchases, significantly reducing the upfront cost for consumers. However, the exemption will be reduced to a 3.3125% sales tax rate starting October 1, 2024, and will be completely phased out on July 1, 2025.
• Washington exempts the first $15,000 of new electric vehicles with a selling price that does not exceed $45,000. Washington also exempts the first $16,000 of used electric vehicles with a selling price that does not exceed $30,000. These exemptions are set to expire on July 31, 2025.

Charging stations and electricity for electric vehicles: To support the growing number of electric vehicles, some states have introduced sales tax incentives for EV charging infrastructure. For instance:

• Washington offers a sales tax exemption on the purchase and installation of EV charging stations until July 1, 2025.
• Illinois includes EV charging stations in its Alternative Fuels Data Center, which provides tax incentives for installation.

• Wisconsin will implement a sales tax exemption for electricity sold through EV charging stations effective January 1, 2025.

Income tax rebates and credits

Electric vehicles: In addition to sales tax benefits, many states provide income tax credits for purchasing electric vehicles. For example:

• Georgia offers a state income tax credit for a percentage of the cost to convert a vehicle to alternative fuels including electric, which can be claimed when filing state tax returns.
• Colorado offers a substantial state income tax credit for electric vehicle purchases.

Charging stations for electric vehicles: Income tax credits are also available for EV charging station installations. For instance:

• Connecticut offers various rebates and incentives through a program started in January 2022. While these all flow through the utility companies, they are mandated by the state through December 2030.
• Georgia offers a state income tax credit for a percentage of the cost to install a qualified electric vehicle charging station. This credit is only available to businesses.
• New York provides income tax credits for businesses installing EV charging stations through the end of 2025.

State tax incentives for electric vehicles and related infrastructure play a crucial role in promoting cleaner transportation alternatives. By providing various sales and income tax exemptions and credits, states are making it easier for consumers and businesses to invest in electric vehicles and the necessary charging infrastructure, thereby fostering a more sustainable future.

How Wipfli can help

If you need advice on how to make the most of a transition to greener energy, Wipfli can help. Our energy advisory professionals understand all the tax implications of EVs and their infrastructure, and we can help you chart a course for a more sustainable future. Talk to an advisor today.