July 28

Tax Incentives for EV Owners in Texas


It is common knowledge that many fancy electric vehicles (EVs) to save on fuel. But that’s just one benefit of purchasing an EV. Many states offer tax breaks for EV ownership, with Texas strongly committed to this relief scheme. EV owners in Texas can take advantage of tax incentives, such as a $2,500 rebate program offered for a limited time. There are also tax credits and discounts from utility companies and insurers. 

Let’s look at the tax incentives for EV owners in Texas.

Texas Emissions Reduction Program Rebate

EV Tax Rebates For Car Owners

Close-up of a cable connected to an EV charging station. Electric vehicle in the background being charged by Ivan Radic with license CC by 2.0

The Texas Emissions Reduction Program, or TERP, provides a $2,500 rebate that retroactively applies after purchasing or leasing an EV or plug-in hybrid vehicle (PHEV). The TERP rebate applies to eligible automobiles bought or leased from a Texas dealership after September 1, 2021, with up to 2,000 rebates available by January 7, 2023, or when funds are depleted.

There are three main steps to qualify for TERP:

  • Form 2, signed by a dealership representative.
  • A copy of the title if you’re applying retroactively or a copy of the Application for Texas Title and Registration if you’re in the process of buying or leasing.
  • Financing documents, like a contract or a copy of the check.

Check out the TERP website for details like a list of eligible vehicles and application forms.

Texas Incentives and Information

Texas offers other incentives and has enacted laws for EVs and PHEVs. Available incentives include up to $2,500 for EVs and $5,000 for compressed natural gas, propane, and biofuel vehicles. While the state-specific information covers alternative fuels, the Alternative Fuels Data Center provides relevant details for EVs and PHEVs. Incentives also include rebates for purchasing cars and installing charging stations. The data center also carries specifics about Texas’ National Electric Vehicle Infrastructure Plan.

Federal Incentives

Tax credits of up to $7,500 through the U.S. Department of Energy are available for new EVs and PHEVs. This incentive reduces your income tax and, by extension, what you owe for your tax bill. It also directly reduces your taxes, unlike tax deductions, which reduce your taxable income and tax bill by a small amount. Further, unlike the TERP program, this federal incentive only applies to purchases, not leases.

Plug-In America

You can view the incentives in your region by entering your zip code on the Plug-In America website. The site also offers information on shopping, feature reviews and comparison, charging at home or on the go, and special events for potential and actual EV owners.

Utility Incentives

Ask your electric provider if there are discounts on electrical rates or rebates for purchasing and installing a charging station at single-family or multi-family properties. Rebates could cover up to half the cost of installing a Level 2 charging station, depending on the utility company. Also, charging overnight can save money, as electricity consumption costs less in off-peak times.

Insurance Discounts

Check with your insurance agent to see if any discounts are offered for insuring an EV. EVs cost more to insure than traditional gas-powered cars due to EVs’ higher cost and more complex components. Insurance premiums average 15% higher for EVs, but some of that cost may be offset by insurance company discounts.

What Kinds of Plug-In Electric Vehicles Are Available?

Regular hybrid vehicles don’t need to be plugged in, as their gas engines recharge the batteries during driving and braking. But PHEVs use electric and gas power in tandem, — alternately or simultaneously. The more powerful batteries must be plugged into a charger since they can’t fully regenerate charge through driving like regular hybrids’.

EVs operate solely on electrical power, charging while plugged in. They only have an electric motor, with no gas tank to provide an alternative energy source.

On the other hand, you can charge PHEVs in traditional 120-volt home outlets, though they charge faster with a 240-volt outlet at a specialty charging station. Special charging stations can be installed at home and are available at several public locations, like parking garages, malls, restaurants, and airports. It’s worth noting that road trips with a PHEV or an EV require planning charging stops, which you can do via mobile phone apps. Charging costs apply and can be paid upfront.

Battery life for PHEVs depends on driving habits, terrain, and consumption of additional vehicular resources, like air conditioning. Radio, headlights, and other accessories can also use up battery power. Additionally, many models have a maximum speed, usually capped at 80 to 90 mph, that can be achieved using solely electric power.

Operating tips for Texas drivers

You can optimize your EV’s or PHEV’s performance by following a few tips on charging, maintenance, and planning longer trips.

Charging can be done in one of three ways. Level 1 uses a standard outlet with a cable included with the car and provides slower charging rates of about 3 to 5 miles an hour. This charging equipment is ideal for drivers who travel under 40 miles a day. Level 2 uses a standard outlet connected to a charging station and charges at between 15 to 30 miles per hour, which is helpful for those who travel 100 miles or more daily. DC Fast Charging provides charging rates of 150 to 400 miles in an hour and requires a specialized high-voltage setup.

Charging is best done in off-peak times, usually from 10 p.m. to 6 a.m., with timers available to set charging times. EVs have gauges that let you know how much battery life remains. Like with gas vehicles, EVs should be kept operating between 20% and 80% power levels. Be sure to charge up to about 80% before short- to mid-distance trips or fully charge to 100% before longer distances. For those on the go, we recommend you don’t charge beyond 80% at fast-charge stations.

Texas has a growing network of over 2,000 charging stations for commuters, with most of these supporting multiple connector types for various models. Besides, other than charging, EVs require minimal maintenance compared to gas vehicles’ service demands. EVs also use fewer moving parts, and their batteries are maintenance-free.

If you’d like to check out the EVs available at Huffines Chevrolet, you can find us at 1001 Coit Road in Plano, Texas. Our showroom hours are 8:30 a.m. to 8 p.m. Monday through Saturday. You can also call us at 972-867-4000 or drop us a message via our secure online contact form to get started.


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