Tax Credit Reinstated on Purchase, Lease of New Plug-in Hybrid Vehicles

South Carolina has reinstated the income tax credit for the purchase or lease of new plug-in hybrid vehicles for tax years 2012 through 2016.

Under legislation (H.R. 3059) enacted May 14, the credit is equal to $667, plus $111 if the vehicle has at least five kilowatt hours of battery capacity. The taxpayer may receive an additional $111 for each kilowatt hour of battery capacity that exceeds five kilowatt hours. Previously, the credit was equal to $2,000.

A “plug-in hybrid vehicle” is a vehicle that meets the following requirements: it shares the same benefits as an internal combustion and electric engine with an all-electric range of no less than nine miles; it has four or more wheels; it draws propulsion using a traction battery; it has at least four kilowatt hours of battery capacity; and it uses an external source of energy to recharge the battery.

To qualify for the credit, the vehicle must be manufactured primarily for use on public streets and highways. Vehicles classified as low-speed or medium-speed vehicles do not qualify.

To claim the credit, taxpayers must provide certification from the vehicle's manufacturer regarding its qualification as a plug-in hybrid vehicle and its battery capacity.

The maximum amount of credit allowed per taxpayer is $2,000. The total aggregate amount of credits allowed by the state for all taxpayers may not exceed $200,000 per calendar year and the credits must be distributed on a first-come, first-serve basis.

The legislation took effect May 14, but applies to in-state purchases and leases made on or after July 1.