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Maryland EV Tax Credit – Everything You Need to Know

Maryland EV Tax Credit – Everything You Need to Know
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What thoughts come to mind when you think of Maryland? For me it’s good times at the Baltimore Aquarium and eating at awesome seafood restaurants on the Chesapeake Bay. Being a resident of Virginia, I find myself venturing into The Old Line State from time to time. My beloved commonwealth doesn’t currently offer any incentives, although legislation has been introduced to do so in the past. If you’re one of the 6 million residents of the State of Maryland, you may be in luck if you’re in the market for an all-electric vehicle (EV) or plug-in hybrid electric vehicle (PHEV). This is everything you need to know about the Maryland EV tax credit.

A Bit of History

In October of 2013, eight U.S. states entered into a memorandum of understanding (MOU) with each other committing to take action in implementing zero-emission vehicle (ZEV) programs. Maryland was included in this list, which are often referred to as “ZEV” states. For purposes of this MOU, ZEVs include EVs, PHEVs, and hydrogen fuel cell vehicles (FCEVs). While I’m not sure how PHEVs got included as they are definitely not “zero-emission,” they do serve to advance the technology and are better for the environment. The primary goal of this action was a pledge to have at least 3.3 million ZEVs being operated by drivers in their states by 2025. Maryland’s EV tax credit is a direct result of this cooperative effort and early indicators show that it has been wildly successful thus far.

The program has not been without criticism however. Critics have pointed to the fact that EV owners typically come from higher educational and socioeconomic backgrounds to begin with. Ellen Valentino, Executive Vice President of the Mid-Atlantic Petroleum Distributors Association alluded to this fact by saying, “Six million dollars is a lot of money for people shopping for a $63,000 new vehicle.” While it may be easy to write off Ms. Valentino’s criticism because of her professional association, she does have a point.

That being said,what better way is there to get more environmentally friendly vehicles on the road than offering incentives for purchase?

Why Not Both?

First and foremost, Maryland residents can take advantage of the Federal Income Tax Credit for qualified EVs and PHEVs. This program essentially acts as a rebate for the purchase of a new qualified car to the tune of 30% of the car’s sale price or $7,500! Act fast however, this credit will be phasing out over the next few years. This percentage will drop to 26% in 2020, 22% in 2021, and 0% in 2022. All good things must come to an end I suppose…

Maryland Only

For Maryland residents who purchase a new EV or PHEV within state lines, there are several incentives to take advantage of thanks to the  Maryland Clean Cars Act of 2019 (HB1246). The state offers a one-time tax credit of $100 per kilowatt-hour of battery capacity up to a maximum of $3,000. This means that pretty much all new EVs or PHEVs will get the full $3,000 credit. Maryland also offers a rebate of 40% of the cost to install electric vehicle charging equipment and drivers of EVs and PHEVs can use the state’s High Occupancy Vehicle (HOV) lanes not matter how many passengers are in the car. You will have get a permit from the Maryland Vehicle Authority (MVA) before doing so however. Qualified vehicles are also exempt from emissions testing… which you’d think would be a no-brainer!

The Requirements

According to the MVA’s website, in order to qualify for the tax credit, your new car must:

  • Be made by a manufacturer primarily for use on public streets, roads and highways.
  • Cannot be modified from the manufacturer’s specifications.
  • Must be a new vehicle and titled for the first time on or after July 1, 2017, but before July 1, 2020.
  • Must be acquired for use or lease by the taxpayer, and not for resale.
  • Have a battery capacity of at least 5.0 kilowatt-hours (applies only to plug-in electric)
  • Have a total purchase price not exceeding $63,000.

My only question revolves around bullet point number two. What do they mean by “cannot be modified from the manufacturer’s specifications?” Does this mean that any car mods are going to disqualify someone from getting the credit? What about putting new rims on your Honda Clarity as we mentioned here or a new spoiler on your Tesla Model 3 as we discussed here? Model S and X buyers are already out of luck because of the $63,000 limit. Surely aftermarket modifications like this won’t disqualify someone? Maybe a reader who is in the know can chime in below and set the record straight.

Not So Fast…

All of this sounds great right? As it turns out…it’s been a bit too great. As first reported by the Baltimore Sun, this program has been so popular that Maryland ran out of money allocated to give to EV and PHEV purchasers. The state set aside $6 million in funding for buyers, all of which has now been depleted. Buyers can still apply for the credit, but as of the date of this writing no additional funds have been authorized. You can still take advantage of the considerable Federal Tax Credit and there is a chance that Maryland’s legislature will pass similar bills in the future. The form to apply can be found here. I would encourage anyone who has purchased a new EV or PHEV in Maryland and who currently resides in Maryland to go ahead and apply. There’s no fee and you never know what the future holds!

Don’t let the fact Maryland EV tax credit may no longer be available get you down dear readers. There are more than enough reasons to buy an EV or PHEV. Think about your reduced carbon footprint! Think about driving by the gas station with a smug look on your face and a feeling of superiority! Trust me, it’s worth it!

Anyone out there live in Maryland and care to chime in on the subject? Are these tax breaks just a cut for the wealthy as critics claim or does the good outweigh the bad in offering these incentives? What do you think the chances are of a similar tax credit being offered in the future? Please leave us a comment below and share your thoughts.

Source | Image: Maryland.gov

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Neil Brooks
Neil Brooks is an electric vehicle owner and lover currently based in the greater Washington D.C. area. Neil is a fan of all things electric and may be the only person in the Mid-Atlantic region of the United States to own both an electric leaf blower and an electric chainsaw. When he's not busy blogging about the latest on electric technology he enjoys grilling, rock climbing, and taking naps in his hammock.