Tax credits provide incentive for purchasing electric cars

Tax credits provide incentive for purchasing electric carsThose who are interested in using their car loan for a good cause may ant to look into plug-in electric vehicles, as they may help drivers save thousands of dollars thanks to a 2009 tax credit.

While the hybrid vehicle credit of up to $3,400 expired in December, consumers still have the option to take advantage of the electric credit that was unveiled in the economic recovery package two years ago. According to financial columnist for USA Today Sandra Block, buyers could be eligible for a tax break between $2,500 and $7,500 – the amount is related to battery size.

Block also says that unlike its hybrid counterpart, the credit will not expire when an automaker has sold 60,000 units of a certain electric model. Rather, the incentive expires at 200,000 models sold.

Beyond federal tax credits, some states offer their own for plug-in vehicles, including Colorado, which offers up to $6,000.

This is all well and good, but Block also mentions that it is important to keep a record of your credit. Twenty percent of the credits claimed in 2010 were done incorrectly, which ended up costing the group some serious bucks.