The feds are kicking back some bucks to reward consumers for their electric two-wheelers: As part of the American Recovery and Reinvestment Act, two new tax incentives apply.
A tax credit allows two-wheeled EVs to qualify for the 10% plug-in vehicle tax credit, capped at $2,500. To qualify for the federal tax credit, these vehicles have to be highway-capable. A tax credit is directly subtracted from your tax bill.
The second incentive is a federal tax deduction that allows taxpayers to deduct state and local taxes paid for a new electric motorcycle. (Note that this deduction is subject to a phase-out for taxpayers with adjusted gross income of more than $125,000; $250,000 for joint returns.) As a federal tax deduction, the amount is subtracted from your adjusted gross income, reducing your taxable income.