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Tax credits and rebates for buying an electric car in Canada

Reduce your carbon footprint, lower your tax bill and save with rebates when you buy a zero-emissions vehicle (ZEV) in Canada.

Buying an electric vehicle is not only better for the environment, but it’s estimated that it could save you around $140 per month on vehicle-related expenses. Because of these benefits, both the federal government and a couple of provinces in Canada offer tax credits or rebates as an incentive to get more electric vehicles on the road.

What tax credits are available in Canada?

The tax credits available at the federal level are Canada-wide but only 2 provinces, British Columbia and Quebec, offer additional provincial credits to help reduce the cost of purchasing an electric vehicle. These typically apply to the initial purchase or lease of any new zero-emissions vehicle (ZEV). This includes battery-electric vehicles, plug-in hybrid vehicles and hydrogen fuel cells.

Federal tax credits

The Canadian federal government offers a tax credit of up to $5,000 for the first registered owner of a battery-electric, hydrogen fuel cell, and longer range plug-in hybrid vehicles. Shorter range plug-in hybrid electric vehicles are eligible for an incentive of $2,500. Electric vehicles that are eligible for incentives must have a MSRP less than $45,000 in some cases, and up to $60,000 in others.

What’s the definition of long range vs short range?

According to the government, long range ZEVs have a battery capacity of at least 15 kWh and can accommodate a trip of 50 kilometres or more on a single charge. Short range ZEVs have a lower battery capacity than that.

Note: British Columbia defines long range as a battery range of 85 kilometres or higher.

For more information, you can check Transport Canada’s full list of ZEVs that qualify for a tax credit and how much you could get back.

Provincial tax credits

Currently, only 2 provinces in Canada, British Columbia and Quebec, offer tax credits for the initial purchase of a ZEV that work in tandem with the federal benefit — meaning you may be eligible for more than the $5,000 federal cap.

While there are no rebates available to electric vehicle owners in Ontario, keep in mind that you’re eligible for a green vehicle licence plate, which allows you to drive on high occupancy vehicle (HOV) lanes regardless of how many people are in the vehicle.

  • * The tax credits and rebates listed above are current as of January 4th, 2020. The federal program will provide $300 million towards these credits until December 31st, 2023 and the program is offered on a first-come, first-served basis. Provincial-based incentives are constantly being revised based on available funding and program duration.

    How much will you actually save with an electric car?

    Need a little help to buy your green vehicle? Compare car loan lenders

    Tax credits and rebates are just a few ways to make it affordable for you to reduce your carbon footprint. You can also look into financing options for electric vehicles. Take a step towards clean energy with one of the Canadian car loan providers in the table below who all offer financing for electric vehicles.

    Name Product Loan Amount Interest Rate Loan Term Min. Credit Score Requirements Table description
    CarsFast Car Loans
    $500 - $75,000
    4.90% - 29.90%
    12 - 96 months
    Min. income of $1,800 /month, 3+ months employed
    Get a new or used vehicle delivered to your door.
    Browse thousands of vehicles from dealers across Canada and get matched with financing that meets your needs.
    Loans Canada Car Loans
    $500 - $35,000
    0% - 29.99%
    3 - 96 months
    Min. income of $1,800 /month, 3+ months employed
    Compare rates from multiple lenders.
    Complete a single application to get quotes from different lenders. Bad credit, CERB and EI borrowers considered.
    $7,500 - $85,000
    3.99% - 29.99%
    12 - 96 months
    Min. income of $1,800 /month, 1+ months employed
    Available in Ontario only.
    Apply online and get your new vehicle delivered to your door anywhere in Ontario free of charge. All credit scores considered.
    Coast Capital Car Loan
    $10,000 - No Max.
    18 - 84 months
    Able to service debt payment of $300/month
    Competitive rates and flexible terms.
    Finance new and used vehicles from one of Canada's largest credit unions. No credit union membership required. Available across Canada except SK, QC, NT, NU, YT.
    Splash Auto Finance
    $10,000 - $50,000
    9.90% - 29.90%
    24 - 84 months
    Min. income of $2,200 /month, 3+ months employed
    Apply with any credit score.
    Get financing for a new or used car. Auto loans for borrowers with fair credit, bad credit, no credit or bankruptcy.
    goPeer Car Loan
    $1,000 - $25,000
    8.00% - 31.00%
    36 - 60 months
    Min. income of $40,000 /year
    P2P platform with competitive rates.
    Canada's first regulated consumer peer-to-peer lending platform that connects creditworthy Canadians looking for a loan with Canadians looking to invest.
    Carloans411 Car Loans
    $500 - $50,000
    1.90% - 19.99%
    Up to 72 months
    Min. income of $1,600 /month, 3+ months employed
    High application approval rate.
    Get connected with suitable lenders to finance your next car, van or truck. Check eligibility for this loan through LoanConnect.
    Canada Auto Finance
    $500 - $45,000
    4.90% - 29.95%
    3 - 96 months
    Min. income of $1,500 /month, 3+ months employed
    Get financing from partnered local lenders.
    Financing for a new or used car is available for borrowers with bad credit, no credit, CERB, EI or bankruptcy.
    LoanConnect Car Loans
    $500 - $50,000
    9.90% - 46.96%
    3 - 120 months
    No min. income requirement
    Pre-approval in as little as 60 seconds.
    Get access to 25+ lenders through this brokerage. Get your funds in as little as 24 hours.

    Compare up to 4 providers

    Bottom line

    The Canadian federal tax incentive for a new electric car can help reduce the overall cost of going green. But before you commit to your next ride, read our guide to buying green cars and learn more about car loans to make sure you can afford the switch.

    Frequently asked questions about tax credits for electric vehicles

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