Are There Tax Benefits For Electric Bicycles?
Electric bikes have become increasingly popular worldwide, specifically in the United States. In 2022, the USA made $1.3 billion in sales showing an increasing surge for e-bikes. It is an environment-friendly mode of transportation that is cheaper and more convenient for people of all age groups. An e-bike saves time, expenses, and stress-free commuting compared to the public or any other mode of transportation. Therefore, to encourage the adoption of eco-friendly transportation options, the government offers various tax incentives and rebate programs for purchasing electric bikes.
Learn About Electric Bike Tax Incentives
Tax incentives are the financial rewards a government offers for purchasing electric bikes. The primary purpose of these tax incentives is to promote and attract most people to shift to environmentally friendly modes of transportation. Let's discuss some common tax incentives.
1. Tax Credit
A tax credit means a direct reduction in the tax amount payable by a taxpayer. It holds more value than deductions as it has a dollar-for-dollar reduction in tax liability. You will have the opportunity to receive tax credits, if the electric bike motor power is not more than 750 watts, a pedals-based vehicle, and a speed limit of 20 mph.
2. Tax Deductions
It applies to gross income that is liable for tax payments. It means a $1,000 tax deduction will reduce the taxable amount and if it is in the 22% tax bracket, it will save $220 in taxes.
3. Rebates
Rebates are a partial form of refunds. You will have to apply for a rebate on purchasing a new electric bike. So a $300 rebate means you will qualify for a $300 refund. Rebates are usually for state residents only on class 1 and 2 e-bikes.
4. Exemption
Exemption allows not to pay certain taxes on purchasing a new electric bike. Such as an exemption on sales tax means no sales tax will be applicable on such vehicles. Exemptions are available for specific periods to state residents for selected electric bike models and branches. Proof of residency and purchasing is compulsory to avail exemption.
5. Grants
Grants are the amount paid for certain purposes and projects. Usually, the government provides e-bike grants to attract more people towards eco-friendly commuters. Often government supports people who qualify for the grant by offering fixed grants on low-specification electric bikes.
The Purpose of Tax Incentives
The government is focusing on promoting eco-friendly transportation. The only way to reduce the carbon footprint is to reduce gasoline-powered vehicles. Therefore, being an environmentally friendly vehicle, electric bikes still have a cost barrier that needs to be reduced. Different tax incentive programs help to attract more people to adopt electric bikes. Thereby contributing to a decrease in carbon emissions and fostering a greener environment.
U.S. Federal Government’s Tax Incentives For Electric Bicycles
At the Federal level, the U.S. government does not offer any tax incentives on e-bikes. However, a bill named Electric Bicycle Incentive Kickstart for the Environment Act was introduced in March 2023. The bill was referred to a House- ways and means committee. It is in the initial stages and will take some time. According to the bill, the Federal government will provide a tax credit of upto 30% for qualified electric bikes not more than $8,000 with a minimum of 750 watts of motor power. The electric bike must be an operable paddle or saddle and seat for a rider. While this bill needs time to be enacted into law. Therefore, consider state and local government-based electric bike tax incentives.
State and Local Government Tax Incentives
Many states and local governments are in favor of tax incentives in the form of rebates, vouchers, and discounts to promote and support electric bicycles.
1. Florida: Florida started a tax credit program in April 2023 under the Federal Electric Bike Incentive Credit Bill 2023. There is a 30% or up to $1,500 tax credit for those who purchase a new eco-friendly electric bike. The program is only for the residents of Florida.
2. Hawaii: The State of Hawaii offers a $500 rebate or 20% discount for new electric bicycles. It is only for those who do not have a car or have a lower income bracket.
3. California: Clean vehicle rebate project (CVRP) provides a $1,000 to $7,500 rebate on acquiring or leasing zero-emissions electric bicycles. Similarly, California e-bike incentive project rebates of $1,000 for regular and $1,750 for cargo e-bikes.
4. New York: Under ‘Ride Clean’ New York gives an instant tax rebate of 50% up to $1,100 for state residents. You can also get regional incentives like the NYC trade program specifically for delivery riders.
5. Colorado: There is a rebate program to support low or moderate-income residents who can not buy new electric bicycles. Therefore, the Colorado Energy Office provides a $500 to $1,100 rebate on several e-bike models.
Besides this, many other states of the USA offer tax incentives for their residents. You can check with the local and state sites to get tax incentives.
How To Claim Tax Benefits For E-Bikes
Generally, each State and Federal government has some requirements to follow to avail tax benefits. It includes specific electric bike requirements, the purchasing process, and necessary documentation.
Step-by-Step Guidance
1. Research Eligibility: Firstly, you will need to check both federal and state websites to know about the latest tax incentive programs available for you.
2. Purchase Qualifying E-Bike: Every incentive program specifies the types of electric bikes eligible for the program such as class 1, 2, and even class 3 e-bike. Ensure your selected electric bike meets all the eligibility criteria.
3. Collect Documentation: Keep up all the records related to electric bike purchases, payments made, and other necessary receipts as proof.
4. File Tax Forms: Complete the necessary tax forms, such as IRS Form 8936 for federal credits, and any state-specific forms.
5. Submit Application: You should submit your application by following state-specific guidelines as each program has a specific timeline. Therefore, submission within the deadline is compulsory.
Required Documentation
You should make sure of the availability of the following important documents to apply for tax incentives.
- Proof of purchase (receipts, invoices)
- Model specifications
- Proof of residency (for state/local incentives)
- Completed tax forms
Fiido Electric Bikes and Tax Benefits
Fiido is a leading electric bicycle manufacturer that offers a wide range of models for every age group rider. Fiido mainly produces Class 1 and Class 2 electric bicycles, so most models have the opportunity to enjoy tax benefits. Some models like Fiido X, D11, and C11 are popular and the best ebike deals. These have no more than 20 mph top speed and 750w motor power.
In addition to potential tax benefits, Fiido electric bicycles offer numerous other advantages, such as lightweight and foldable designs, extended battery life, and affordable pricing. These electric bikes make their contribution to reducing carbon footprint with zero emission.
Future Outlook and Suggestions
The future of tax incentives looks promising as potential increase and expansion is expected from the government. Proposed legislation like the Electric Bicycle Incentive Kickstart for the Environment Act reflects the government's intention to promote usability and recognition of this eco-friendly commuter. Therefore, when purchasing an e-bike, you must consider available tax benefits. You can take full advantage by staying informed about new legislation and local programs about incentives.
Conclusion
Tax incentive programs make it possible to reach this eco-friendly electric bicycle for many customers. As the federal government is still in the process of enacting laws specific to e-bikes, the State and local governments are also supporting different tax rebate initiatives. These initiatives have given awareness and increased e-bike users. By taking full advantage of tax incentives you not only enjoy the discounted tax benefits but also contribute to a clever and greener environment.
