Federal Tax Credit, Sales Tax Deduction, and State IncentivesZero Motorcycles line of street legal electric motorcycles are eligible for the recently passed 10% federal tax credit for plug-in vehicles. All Zero Motorcycles, including dirt bikes, are also eligible for the state sales tax deduction on motorcycles (available through 12/31/2009 and subject to income limitations) which was included in the Federal stimulus package.Both the tax credit and sales tax deduction will be available on your 2009 IRS Form 1040. Example - purchase of a Zero S: If you purchase a Zero S for $9,950 and keep the receipt. At the end of the year you will be eligible for a 10% tax credit. This means the federal government will literally give you back $995. This effectively reduces the purchase price of your motorcycle by almost $1000 and reduces the total cost to $8,950. In addition, you can also write off the total amount of sales tax you paid for your motorcycle. This lowers the amount of taxes you owe by your effective tax rate. Example- purchase of a Zero X: If you purchase a Zero X for $7,450 and your state charges you a 10% sales tax, the total amount the state adds to your purchase price is $745. At the end of the year you can deduct the total amount of the sales tax paid on your Federal tax return, in this case $745, from your taxable income (assuming that your income is below the cutoff - see details below). Since the Zero X is an off-road motorcycle, you cannot claim the 10% plug-in federal tax credit.  Federal Tax Credit and Sales Tax Deduction - the Details As part of the American Recovery and Reinvestment Act of 2009 (H.R.1) two new tax incentives were included for electric motorcycles. The first is a tax credit in Section 1142 (H.R.1, pp. 214-217) which changes IRS Code Section 30 to allow for 2 wheeled electric vehicles to be included as a “qualified plug-in electric vehicle” in the overall plug-in vehicle tax credit. These vehicles which need to be able to drive on public roads, streets, and highways, are eligible for a 10% Federal Tax Credit up to a maximum of $2,500. This is a Federal tax credit, which reduces your tax liability by the amount of the credit; eg: if you owe $5,000 to the IRS and purchase an $11,000 electric motorcycle package, you would receive an $1,100 credit and now owe $3,900. If you are owed a refund by the IRS, your refund is increased by the amount of the tax credit. The second is a tax deduction for state sales taxes paid on motorcycles under Section 1008 (H.R.1, pp. 203-204). This provides all taxpayers with a deduction for State and local sales and excise taxes paid on the purchase of new cars, light truck, recreational vehicles, and motorcycles through 2009. This deduction is subject to a phase-out for taxpayers with adjusted gross income in excess of $125,000 ($250,000 in the case of a joint return). In this case, since it is a Federal tax deduction, the amount comes off your adjusted gross income and reduces the amount of taxes paid based on your income tax bracket. As with all tax matters, this information does not constitute tax advice, please consult your tax advisor, attorney, or accountant for specific details on how to claim these tax benefits. The IRS will be providing final forms and instructions for these new tax incentives later in 2009. |
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Stimulus Incentives by State There are now at least sixteen states that have either passed or have under consideration plug-in tax credits (BEV or PHEV). The original Federal tax credit of $2500-$7500 was signed into law on 10/3/08 and has since been expanded to cover motorcycles.
"Stimulus by State" information is courtesy of Plug In America. |
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