Illinois EV Incentives: Understand The Tax Credit & Electric Vehicle Rebate Program

While the overall take-up of electric vehicles in Illinois has been relatively slow, with only 36,520 registered to date, it is still the country’s 8th most active EV state.

At A Glance:

1️⃣ The state has prioritized having 1 million all-electric vehicles registered in Illinois by 2030, requiring a massive conversion from gas to EV. In addition, the state has introduced several progressive measures to achieve these goals.

2️⃣ All new buildings must have EV recharging stations incorporated in designated parking spaces.

3️⃣ Generous tax rebates are offered for EV purchases for Illinois residents.

4️⃣ The authorities are offering significant tax credits for EV car manufacturers who move to the state.

Overview Of Illinois’ EV Incentives and Rebates

When added to the Federal government EV and solar system incentives, Illinois is an excellent example of what a state can do to promote the conversion from gas-powered vehicles to electric.

There are four categories of incentives offered to EV and Solar power purchasers.

Federal Government EV Incentive
Illinois EV incentive.
Federal Government Solar incentive
Illinois solar incentive

Federal Government EV Incentive

The federal government pays a tax credit of up to $7,500 for purchasing a new EV. Half of this amount is available for used EVs.

The rules require the vehicle and taxpayer to meet the following requirements:

The battery capacity must be at least 7 kWh.
The car must weigh less than 14,000 pounds.
A qualifying company must manufacture the vehicle (see list).
The final assembly is done in North America.
To qualify for the highest credit level, the vehicle must be new.
The vehicle must cost less than $80,000 (this includes vans, SUVs, and pickups) and $55,000 for other vehicles.
The joint household income must be less than $300,000 ($150,000 for single filers).
The earning limits on used EVs are $150,000 ($75,000 for single filers).

Illinois EV Tax Incentives

The Illinois Environmental Protection Agency (IEPA) will provide a $4,000 tax credit for EV purchases.

The rules require the vehicle and taxpayer to meet the following requirements:

Purchase a new or used all-electric vehicle within the state lines.
To qualify for the full rebate, the vehicle purchase date must be purchased before June 30, 2026.
Between July 1, 2026, and June 30, 2027, the rebate drops to $2,000.
After July 1, 2028, the rebate drops to $1,500,
The purchaser must be a resident of Illinois.
Only one rebate in a 10-year period per applicant.
The vehicle on which the rebate is requested must have never been the subject of a previous rebate payment.
The vehicle must not be sold for twelve months after paying the rebate.

The utility, American Illinois, provides a Time Of Use (TOU) discount if the electric vehicle is charged during off-peak hours.

The Illinois Environmental Protection Agency (IEPA) will also offer rebates of up to 80% of the cost to install Level 2 EV charging and direct current fast charging (DCFC) stations.

Federal Government Solar Incentive

The federal government will provide a tax credit with the IRS to the value of 30% of all installed solar systems in private houses.

If the system is sized correctly, it can charge EVs through a level 2 charger. This will have a significant impact on household expenses.

Illinois Solar Incentive

Illinois offers the following incentives for homes converting to solar energy.

Solar Renewable Energy Certificates (SRECs)

Solar system owners are offered a Solar Renewable Energy Certificate (SREC) for each megawatt hour they generate. These negotiable financial instruments can be sold on the SREC market at their current values.

Property Tax

Illinois will not charge property tax on the increased value of a home due to the installation of a solar system.

How To Take Advantage Of Illinois’ EV Rebates & Incentives

The Federal incentives are declared in that year’s IRS tax form and file Form 8936, and the credit will be passed.

Within 90 days of the purchase, the owner must apply for the rebate by completing the forms available on the Illinois EPA (Environmental Protection Agency) website and ensuring that all supporting documentation is included.

The Benefits Of Illinois’ Electric Vehicle Rebates & Incentives

Illinois’s progressive incentives and rebates that are available to residents who are switching to renewable energy sources are given substantial benefits to do so.

The state and federal government’s incentives are cumulative. If the price of an EV could be discounted by $11,500 on an EV with a sticker price of $50,000, representing a 23% saving.

Add to that the future savings in not using gas, and the economics of the exercise become very clear.

Illinois is making a proactive and positive step to clean up the environment while attracting new investment from EV manufacturers, which will positively impact employment and tax revenue.

FAQs

Is There A Tax On Electric Cars In Illinois?

Until 2019 Illinois used to charge a tax representing 7.25% of the vehicle’s value. The motivation behind this was to prepay the road tax for five years.

Thankfully this tax has been done away with.

Does It Cost More To Register An Electric Car In Illinois?

Illinois imposes a surcharge of $100 over the cost of registering a gas-powered vehicle. This is a relatively low-value markup compared to other states.

It is, unfortunately, necessary because the state loses the tax included in the price of gas used to maintain the road network.

Key Takeaways

Illinois is among the most progressive states in motivating the switch to EVs.

1️⃣ The state aims to have 1,000,000 EVs registered by 2030.

2️⃣ The state will pay $4,000 to buyers of EVs (new or used).

3️⃣ Added to the federal government credit, up to $11,500 is potentially knocked off the price of the vehicle.

4️⃣ Very generous assistance programs are also available if the owner installs a solar system to power the EV charger.