Vehicles for Green Technology

Rebates, Credits, Vouchers, and Partial Exemption from Sales and Use Tax on the Purchase of Vehicles.

California residents have many incentives when purchasing or leasing qualified vehicles that meet clean energy standards. Provided below is information about some rebates, credits, and partial exemptions that may apply to the purchase or lease of a new vehicle.

Partial Sales and Use Tax Exemption for Clean Cars 4 All Program

Recently enacted legislation, Senate Bill 1382 (stats. 2022, ch. 375) provides for a partial sales and use tax exemption on qualifying zero or near-zero (zero) emission motor vehicles (vehicles) purchased or leased by qualified buyers. The partial sales and use tax exemption is operative from January 1, 2023 through December 31, 2027. Eligibility for the exemption is based on the buyer’s household income level, where they reside, and the vehicle leased or purchased.

The California Air Resources Board (CARB), in association with local air districts, administers the Clean Cars 4 All program (CC4A). The program is designed to provide incentives to lower-income California drivers to scrap their older, high-polluting motor vehicles and replace them with zero emission vehicles. The current CC4A program provides qualified buyers with grants of up to $9,500 for California residents who purchase or lease an eligible vehicle and meet certain residence and income requirements.

To qualify for the partial exemption, you must:

  • Be a qualified buyer who has received an award letter from a participating air district, and
  • Purchase a qualified motor vehicle for which a grant letter has been awarded to you under the Clean Cars 4 All Program.

For more information about how this partial exemption applies to motor vehicle dealers, please see our Tax Guide for Motor Vehicle Dealers.

Clean Vehicle Rebate Project

The Clean Vehicle Rebate Project (CVRP) establishes rebates available for the purchase or lease of a new plug-in hybrid electric vehicle, battery electric vehicle, or fuel cell electric vehicle.

Rebates of up to $7,000 are available for California residents who meet income levels that purchase or lease an eligible vehicle.

Please note: Sales or use tax is due on the total selling price of the vehicle. These rebates do not reduce the selling price of the vehicle or reduce sales or use tax that is due.

More information about the CVRP.

Federal Tax Credit

Federal tax credits are available for the purchase of all-electric and plug-in hybrid vehicles. The tax credits are up to $7,500.

Please note: Sales or use tax is due on the total selling price of the vehicle. These federal tax credits do not reduce the selling price of the vehicle or reduce the sales or use tax that is due.

For more information about this federal tax credit, please visit the U.S. government source for fuel economy.

Hybrid and Zero-Emission Truck and Bus Voucher Incentive Project

The California Air Resources Board (CARB), in partnership with the nonprofit organization, CALSTART, administers the Hybrid and Zero-Emission Truck and Bus Voucher Incentive Project (HVIP) to encourage the use of hybrid and zero-emission trucks and buses in California. HVIP provides discounts to vehicle purchasers by issuing voucher incentives for the purchase of qualifying trucks or buses.

For more information about HVIP and the list of eligible zero-emission buses, visit California HVIP webpage.

Partial Sales and Use Tax Exemption for Zero-Emission Transit Buses

Beginning October 9, 2019, through December 31, 2025, a partial sales and use tax exemption is available on eligible purchases and leases of zero-emission technology transit buses.

To receive the partial tax exemption, you must meet all three of these conditions:

  • The transit bus is HVIP eligible.
  • The purchaser is eligible under Revenue and Taxation Code section 6377.
  • The bus is a transit bus under Revenue and Taxation Code section 6377.

For a complete list of eligible zero-emission buses, visit California HVIP webpage.

For more information about this partial exemption, please see our Tax Guide for Motor Vehicle Dealers.