Washington, California End Plug-In Tax Breaks For The Wealthy


Washington and California have recently passed measures limiting the income levels of people applying for plug-in car tax credits, and I couldn’t be happier. Don’t get me wrong, I think incentivizing plug-in vehicles is a great idea, but nearly 5 years after the first plug-in cars hit the market, it’s time to refocus those efforts on helping people who actually need the tax credits, as opposed to people who can already afford an EV.

While Washington and California have taken different steps in limiting wealthy buyers access to plug-in car tax credits, the end result is the same. In Washington, the sales tax exemption for plug-in cars now only applies to models costing less than $35,000, while California the up-to $4,000 rebate is only available to families making up to 300% of the Federal poverty level (about $60,000 for a family of three in the Golden State). Both efforts are a response to criticisms that the government is essentially subsidizing already-wealthy car buyers, rather than actually helping regular people buy a plug-in car. Washington state is also one of the few states to have a $100 annual EV registration on the books as well.

Studies have revealed that for the most part, tax rebates have little impact on whether wealthy people are actually going to buy a plug-in car or not. In fact, plug-in car buyers tend to be both younger and wealthier than buyers of the conventional version of the same car, and nearly five years after the debut of the Nissan LEAF and Chevy Volt, the program has certainly done its job with California putting more plug-in cars on its roads than any other state. In California particularly, access to the vaunted HOV lanes is a larger incentive than cash back on your taxes. California will still offer a $2,500 rebate for plug-in car buyers making up to $250,000 a year, and there’s still the generous $7,500 tax rebate.

But maybe it’s time for that rebate to change too. I mean, anybody who can even consider buying a Tesla Model S probably isn’t going to be swayed one way or another by a $7,500 tax rebate, and the rebate has become a talking point for many conservatives who consider this to be a handout to wealthy liberals and their electric car agenda.

That said, I prefer Washington’s approach to plug-in car rebates as opposed to California, limiting the availability based on price rather than income. The Tesla Model S is a luxury vehicle that simply doesn’t need to be subsidized at this point. But the Nissan LEAF is really just an electrified econobox (that’s not a dig) with an expensive drivetrain. So instead of a $7,500 tax rebate, I propose offering a $10,000 point-of-purchase rebate (so the money comes off the MSRP at the time of sale) for plug-in cars costing less than $40,000. That’s the dividing line between luxury plug-in cars like the Model S, BMW i3, and Mercedes B-Class Electric, and more “middle class” vehicles like the LEAF and Chevy Volt, without forcing people to forgo leather seats or a navigation system.

Hell, if I could get $10,000 off the MSRP of a Nissan LEAF or Chevy Volt, I’d go buy one tomorrow. But making those higher monthly payments while waiting for my tax rebate? That’s a much tougher pill to swallow.

Christopher DeMorro

A writer and gearhead who loves all things automotive, from hybrids to HEMIs, can be found wrenching or writing- or else, he's running, because he's one of those crazy people who gets enjoyment from running insane distances.