What Are the Tax Benefits for Electric Vehicles in Alabama?

As more automakers prioritize alternative and sustainable fuels and all-electric vehicles, state and federal laws and incentives are catching up. There are many tax benefits for electric vehicle (EV) drivers, making the transition from gas-powered to EV appealing to many drivers. If you’re wondering how to take advantage, check out the tax benefits for EVs in Alabama.

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Alabama EV Incentives, Laws, and Regulations

There currently aren’t any tax incentives or credits that are specific to Alabama. However, the state does offer some benefits for businesses and individuals and also requires a fee, in addition to regular registration renewal. The following are some incentives and fees for EVs:

Alabama EV Infrastructure Support Incentive

The Alabama Infrastructure Support Incentive is an initiative through the National Electric Highway Coalition (NEHC). As part of the NEHC, Alabama aims to participate in the creation of a network of DC fast charging stations spanning the nation’s major highways, from the Atlantic to the Pacific coast. Its membership of the NEHC demonstrates the state’s commitment to ensuring efficient fast charging infrastructure plans that allow for longer EV travel distances. The benefit of the Infrastructure Support Incentive is continuing development and advancement to make EV ownership and travel more accessible.

Residential EV Time-Of-Use Rates

The Residential Electric Vehicle Time-of-Use (TOU) Rate, which Alabama Power dubs “the EV Night Charging Discount (PEV Rate Rider),” is an incentive through Alabama Power. With this incentive for EVs, you can save on your electric bill while charging overnight. Alabama Power’s incentive gives eligible owners a discounted energy rate for charging their vehicles during nighttime hours between 9 p.m. and 5 a.m. To qualify, you’ll need to own or lease an EV and submit proof of eligibility. You must renew your enrollment every year to keep your EV TOU rates.

EV Registration Fee

Some states, including Alabama, require EV owners to pay an annual fee, in addition to their regular registration fees. The fee is $200 for all-electric vehicles and $100 for plug-in hybrid EVs. The newest update to this Alabama law came through on July 1, 2023, adding the provision that fees can increase by $3 every four years. There’s an advantage to this regulation, though, with a portion of the fees going toward the Electric Transportation Infrastructure Grant Program, which offers grants as part of Alabama’s Electric Vehicle Charging Infrastructure Program.

Federal Tax Benefits for EVs in Alabama

Although Alabama doesn’t have state-specific tax incentives for EV owners, the same federal benefits apply to Alabama residents. The main tax incentives you may be able to take advantage of include:

Clean Vehicle Tax Credits

The Clean Vehicle Tax Credits program is updated from the previous EV and Fuel Cell Electric Vehicle (FCEV) Tax Credit and outlines the tax credit benefits for qualified plug-in EVs that were purchased in 2022 or before and new EV models purchased in 2023 and after.

For 2022 EVs and older, the Clean Vehicle Tax Credit offers qualifying EV owners up to $2,917 for an EV with a battery capacity equaling 5 kWh plus $417 for each kWh of battery capacity that exceeds 5 kWh. The maximum nonrefundable allowance for the Clean Vehicle Tax Credit is $7,500. For EVs purchased in 2023, the Clean Vehicle Tax Credit awards the same maximum of $7,500 to eligible EV owners. There are additional requirements for 2023 vehicles and newer, including battery components and critical minerals specifications.

Pre-Owned EV and FCEV Tax Credit

The Pre-Owned EV and FCEV Tax Credit is also updated and is now under the Used Clean Vehicle Credit. This incentive began in January 2023 and offers up to $4,000 in tax credits if you purchase a used EV or FCEV. The purchase price can’t exceed $25,000, and for your EV to be eligible, it must only be up to two years older than the year of purchase.

Alternative Fuel Infrastructure Tax Credit

Alabama residents can also take advantage of the Alternative Fuel Infrastructure Tax Credit, which encompasses fueling equipment for natural gas, propane, liquid hydrogen, diesel blends, and electricity for EVs. If you purchase qualified fueling equipment — such as a residential EV charging station — between Jan. 1 and Dec. 31, 2023, you could be eligible for this tax benefit, which is worth a maximum of $1,000.

Additional Incentives and Benefits for EV Owners

Here are some more incentives and benefits of switching to electric:

Clean Cities Coalition Network

Alabama residents who own an EV can also find additional advantages and incentives with the Clean Cities Coalition Network. The network’s goal is to improve economic, environmental, and energy security through local collaborations to develop initiatives for affordable transportation technology. The Clean Cities Coalition Network encompasses about 100 volunteer groups that help advance this goal through private and public partnerships that promote renewable and alternative fuel initiatives. The beauty of the Clean Cities Coalition Network is its transparency and available information; it can also point you to additional financial opportunities, assistance, and updates to EV laws and regulations.

Pollution Prevention Grants Program

Also at the state level is the Pollution Prevention (P2) Grants Program. This program provides support to state and local tribal assistance programs for technology, education, and research. The P2 Grants Program helps businesses and organizations adopt more efficient environmental approaches to compliance with state and federal environmental regulations. While this incentive is for local governments, private universities, businesses, and nonprofit organizations, individuals can see the advantages in action, as more funding from this program goes into the research and development of cleaner fuel alternatives and pollution reduction solutions.

Complimentary Charging for EVs

You can also get complimentary charging as a Hyundai EV owner through the automaker’s incentive with Electrify America’s fast charging initiatives. When you purchase a Hyundai KONA EV, IONIQ 5, or IONIQ 6, you get 30 minutes of DC fast charging sessions for two years, up to 250 kWh or 1,000 miles. This comes at no additional cost from the date of your EV purchase and allows for complimentary charging at any fast charging station in the Electrify America network.

Are You Ready To Switch to Electric?

If you’re considering making the switch to an EV, look no further than Hyundai. Beyond the federal and state incentives, the automaker provides additional benefits for going all-electric. And if you’re ready for a test drive, contact our team at Hyundai of Auburn. Our auto experts can help you navigate your EV options so you can find the perfect match.

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