Arizona electric vehicle tax credits, rebates and incentives

Does Arizona offer electric car rebates, tax credits or incentives? Here's the short answer: not anymore! Despite being right next door to California, the land of plenty when it comes to EV incentives, Arizona's really not trying to line the pockets of its electric-car buyers. That doesn't mean there's no help whatsoever for EV owners in the Grand Canyon State, but it's hard to come by. Let's take a closer look.

It's gone now, but good question. If you've been following Arizona EV legislation in recent years, you know that owners of alternative fuel vehicles or AFVs (which include pure EVs and hydrogen-fueled electric vehicles) got a big break on the annual vehicle license tax prior to 2022. Specifically, the original AFV license tax was based on 1% of the vehicle's MSRP, which meant the assessed value of a $40,000 AFV was just $400 in the first year of registration. From there, the owner had to pay $4 in tax per $100 of assessed value, adding up to a measly 16 bucks for that $40K ride, with the tax dropping by 15% in each subsequent year.

For reference, owners of conventional cars are taxed based on an assessed value of 60% of MSRP at $2.80 per $100 with a similarly modest annual reduction, so a $40,000 gas-powered car would cost $672 in the first year, and not much less for many years to come. That's $672 versus $16. Advantage: AFVs.

But the state changed tacks aggressively starting on January 1, 2022, when the assessed value for AFVs shot up from 1% to 20%, taking our hypothetical $40,000 AFV's initial license tax from $16 to $320. Just like that, AFVs' advantage was cut in half. Then the hammer really came down. As of January 1, 2023, new AFVs no longer get any special tax provisions. So unless you bought a new AFV before 2023, you're out of luck. AFVs and conventional vehicles are now on the same footing when it comes to the Arizona vehicle license tax.

Nope. Same goes for used EVs by the way. Arizona has decided to treat EVs just like conventional vehicles from an ownership standpoint, notwithstanding that highly preferential treatment before 2022. Oh, and if you're wondering about plug-in hybrid electric vehicles (PHEV)

Here's where the help comes in, albeit modestly. It's no surprise that electricity providers want people to buy EVs given what's bound to happen to your household electricity usage once you start plugging that car in. To make your decision a little easier, Tucson Electric Power, for example, currently offers a rebate of up to $500 if you install a Level 2 charger at your residence. If you live in Arizona and are considering charging at home, we strongly recommend checking with your local electricity provider to see what kinds of deals may be available.

Yes, one. Pure EVs and hydrogen-powered EVs can use HOV lanes even if the driver is the only person in the car. Depending on how much traffic you deal with on a regular basis, this could be a huge benefit.

While Arizona electric car incentives are a sensible place to start, it turns out they largely no longer exist. That means the federal level is where it's at for Arizona EV buyers. Fortunately, we've got you covered. Pop over to our primary EV Tax Credits, Rebates and Incentives page for a rundown of the latest federal EV incentives, or go straight to our authoritative analysis of the Inflation Reduction Act (the federal legislation that governs these incentives) to get every important detail for today's EV shoppers.