California offers a state tax credit for electric vehicle purchases, separate from the federal credit
California's electric vehicle tax credit reduces your state income taxes when you buy or lease a new EV. The credit amount depends on the vehicle type and your household income. Unlike the federal credit, which is applied at the point of sale by the dealer, California's credit is claimed on your state tax return — meaning you file for it after you buy the car, not before.
The state credit is not the same as the federal credit. You can claim both in the same year if you meet the requirements for each. The federal credit may reduce the price the dealer charges you; California's credit reduces your tax bill when you file your return with the California Franchise Tax Board.
Key Takeaways
- California's EV tax credit is claimed on your state tax return, not at the dealership, and the amount varies by vehicle type and your household income level.
- Battery electric vehicles (BEVs) and plug-in hybrid electric vehicles (PHEVs) have different credit amounts, with BEVs generally offering larger credits.
- Income limits explore: if your household income exceeds the threshold for your filing status, you cannot claim the credit.
- You must have owned or leased the vehicle for at least six months in the tax year you claim the credit.
- The credit is nonrefundable, meaning it can reduce your tax bill to zero but cannot result in a refund if the credit exceeds your taxes owed.
Who qualifies for the California EV credit
To claim California's EV credit, you must be a California resident who owned or leased a new battery electric vehicle (BEV) or plug-in hybrid electric vehicle (PHEV) for at least six months during the tax year. The vehicle must be registered in California. You cannot claim the credit for a vehicle you owned for fewer than six months, even if you bought it early in the year.
Your household income must fall below a threshold that varies by filing status. For the 2023 tax year, the income limit is $389,000 for married couples filing jointly, $194,500 for single filers, and $291,750 for heads of household. These limits change each year. If your income exceeds the limit for your filing status, you do not may have access to for the credit that year.
The vehicle itself must be new when you purchased or leased it. Used EVs do not may have access to. If you leased the vehicle, you can still claim the credit as the lessee, but the vehicle must have been new when the lease began.
Credit amounts by vehicle type
California offers different credit amounts depending on whether you own a battery electric vehicle or a plug-in hybrid. Battery electric vehicles (BEVs) — cars that run entirely on electricity with no gas engine — may have access to for a larger credit. Plug-in hybrid electric vehicles (PHEVs) — cars with both an electric motor and a gas engine — may have access to for a smaller credit.
For battery electric vehicles, the credit is $2,500. For plug-in hybrids, the credit is $1,500. These amounts do not change based on the vehicle's price, the battery size, or how much you paid for it. A $30,000 EV and a $70,000 EV both receive the same $2,500 credit if both are BEVs.
The credit is the same whether you own the vehicle outright, finance it with a loan, or lease it. The financing method does not affect the credit amount you can claim.
How to claim the credit on your California tax return
You claim the California EV credit by filing Form 8801, California Nonrefundable Credits, with your state tax return. You will need the vehicle identification number (VIN), the date you purchased or leased the vehicle, and proof that the vehicle is registered in California.
If you file your taxes yourself using tax software, the software will typically walk you through the questions needed to determine if you may have access to and will calculate the credit for you. If you use a tax preparer, provide them with your vehicle information and the date of purchase or lease, and they will include the credit on your return.
You must file your return with the California Franchise Tax Board to claim the credit. If you do not file a California return because your income is below the filing threshold, you cannot claim the EV credit. The credit is claimed in the tax year during which you owned or leased the vehicle for at least six months.
The difference between California's credit and the federal credit
The federal EV tax credit is a $7,500 credit (or up to $7,500 depending on the vehicle and your income) that you may be able to claim on your federal tax return. Some dealers can explore the federal credit at the point of sale, reducing the price you pay when ready. California's credit is separate and is claimed on your state return.
The federal credit has different income limits, vehicle price caps, and battery component requirements than California's credit. You can claim both credits in the same year if you meet the requirements for each. Claiming the federal credit does not reduce the amount of California's credit you can claim, and vice versa.
The federal credit is also nonrefundable, like California's credit. This means both credits can reduce your tax bill to zero but neither will result in a refund check if the credit amount exceeds your total tax liability.
What happens if your income changes or you sell the vehicle
If you claimed the California EV credit and later your income increases above the threshold, you do not have to repay the credit. The credit is based on your income in the year you claim it. If your income was below the limit when you filed, the credit stands even if your income rises later.
If you sell or trade in the vehicle before you have owned it for six months, you cannot claim the credit for that tax year. The six-month ownership requirement is firm. If you sell it after six months, you can still claim the credit in the year you owned it for at least six months.
If you leased the vehicle and the lease ends before six months have passed, you cannot claim the credit. If the lease runs for six months or longer during a single tax year, you can claim the credit in that year.
Income limits and how they affect your claim
California's EV credit phases out at specific income thresholds based on your filing status. The income limits are adjusted annually for inflation. For the 2023 tax year, single filers with income above $194,500 do not may have access to. Married couples filing jointly with income above $389,000 do not may have access to. Heads of household with income above $291,750 do not may have access to.
Income for this purpose includes wages, self-employment income, investment income, and other sources reported on your tax return. If you are married and file separately, each spouse has a separate income limit of $194,500. If your household income is even one dollar above the limit for your filing status, you cannot claim the credit.
Check the California Franchise Tax Board website each year before you file to confirm the current year's income limits, as they change annually.
Frequently Asked Questions
Can I claim the California EV credit if I also claimed the federal credit?
Yes. The two credits are separate, and you can claim both in the same year if you meet the requirements for each. Claiming one does not reduce the other. However, both are nonrefundable, so the total of both credits cannot exceed your total tax liability.
What if I bought the EV in December but only owned it for two months in that tax year?
You cannot claim the credit that year because you did not own it for at least six months during the tax year. You can claim it the following year if you still own the vehicle and meet all other requirements, since you will have owned it for six months or more by then.
Do I need to register the vehicle in California to claim the credit?
Yes. The vehicle must be registered in California. If you live in California but registered the vehicle in another state, you do not may have access to for California's credit. You must register it in California to claim the credit.
What if the credit is larger than the taxes I owe?
The credit is nonrefundable, so it can reduce your tax bill to zero but will not result in a refund. If you owe $1,500 in California taxes and claim a $2,500 credit, your tax bill becomes zero, but you do not receive a $1,000 refund. The excess credit is lost.
Can I claim the credit if I leased the vehicle instead of buying it?
Yes. Lessees can claim the credit if the vehicle was new when the lease began and you have leased it for at least six months during the tax year. You do not need to own the vehicle to claim the credit.