With spring right around the corner, it’s a great time to enjoy warmer weather by hitting the open road. If you’re thinking about buying a motorcycle soon, consider taking advantage of an electric bike. Federal tax credits for electric motorcycles extended through 2016, making them an even better choice for the environment—and your wallet.
Electric motorcycles are gaining a lot of fans thanks to their lower cost of maintenance, lower per-mile fuel costs and improved environmental-friendliness. And now the deal is a little bit sweeter with great tax incentives for new motorcycle purchases.
How the electric motorcycle tax break works
Say you purchased a new electric motorcycle for $15,000. Your electric motorcycle tax credit would be $1,500.
If you owed $2,000 in federal taxes prior to the credit, you would owe just $500 with the credit.
It’s important to note that this credit is a nonrefundable credit, meaning you cannot increase your refund beyond what is already owed to you. So, if you were already getting a $1,000 tax refund, this credit would not increase your tax refund beyond that.
You can use IRS form 8936 to determine your credit amount.
In general, your vehicle’s manufacturer or dealer should be able to provide you with a copy of the IRS letter proving the vehicle is certified as eligible for the tax credit.
For your vehicle to be eligible for this credit, it must:
- Be a two-wheeled plug-in electric vehicle
- Be capable of speeds over 45 mph
- Contain a 4 kWh or larger battery pack
- Have been acquired in 2015 or 2016
- Be manufactured primarily for use on public roads and highways
- Be used primarily in the U.S.
In addition, to claim the credit, you must be the owner of the vehicle. Leased vehicles qualify for the lessor, not the lessee. While the federal tax incentives are a great reason to buy, you’ll also want to look into additional incentives offered by your state, typically found on the state’s DMV website.
Is 2016 the year you find your new clean ride? If you’re looking to buy an electric bike but need financing, check out our best tips on financing a vehicle.
It’s also great to keep in mind that Navy Federal offers motorcycle loans with up to 100% financing, which might work for your financial situation.