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New Member

Is the California electric vehicle rebate taxable income? The amount is $2500.

And where in TurboTax Premier do I add this rebate?

12 Replies
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Level 4

Is the California electric vehicle rebate taxable income? The amount is $2500.

Yes. The California electric vehicle rebates are taxable on both the federal return and the state of California return.

This is true because of IRC section 61: Gross income means all income from whatever source derived unless specifically excluded by law.  A rebate is normally excluded from gross income when it is treated as a reduction in the purchase price of a product or service. However, the California electric vehicle rebate comes from the California Clean Vehicle Rebate Project (CVRP), which is administered by the California Center for Sustainable Energy for the California Air Resources Board.  Therefore, the rebate is issued in a transaction wholly separate from the purchase of the vehicle and cannot really be considered a reduction in the purchase price of the vehicle.

For California purposes, California conforms to IRC section 61 and does not provide a specific exclusion for the CVRP rebate, so the rebate is taxable in California too.


This income will be entered on line 21, form 1040 as other income. Then it will be carried over to the state return. Please follow the directions below to enter your rebate income into the TurboTax. (see screenshots for reference)

  • Click the Federal tab
  • Click Income & Expenses
  • Scroll down to Less Common Income and select Miscellaneous Income (drop-down menu)
  • On the next screen, click start next to Other Reportable Income
  • On the next screen, select yes.
  • You are now on the income input screen. Enter the description and amount.
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New Member

Is the California electric vehicle rebate taxable income? The amount is $2500.

Thank you for replying.  In what section of TurboTax do I apply the electric vehicle rebate?
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Level 4

Is the California electric vehicle rebate taxable income? The amount is $2500.

One moment please.
Highlighted
Level 4

Is the California electric vehicle rebate taxable income? The amount is $2500.

You're welcome! I've edited the answer above to include instructions.
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New Member

Is the California electric vehicle rebate taxable income? The amount is $2500.

The rebate is not wholly separate from the purchase though? To receive and keep the rebate you have to purchase the vehicle and then maintain ownership of the vehicle for 30 consecutive months and provide proof of both to the CVRP. Since the rebate from CVRP places strict eligibility requirements to even receive, it is tied directly to the purchase of the vehicle. Why isn't that the case?
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New Member

Is the California electric vehicle rebate taxable income? The amount is $2500.

What about Rev_Rul_76-96, which says automobile rebate is not gross income? <a rel="nofollow" target="_blank" href="https://www.bradfordtaxinstitute.com/Endnotes/Rev_Rul_76-96.pdf">https://www.bradfordtaxinstitute.co...>
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New Member

Is the California electric vehicle rebate taxable income? The amount is $2500.

Can we please get some clarification on Rul 76-96 from above?
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New Member

Is the California electric vehicle rebate taxable income? The amount is $2500.

But someone also replied this 2 months ago:

“*This is not a credit included on your California state tax refund, so you will not enter into TurboTax.

California actually classifies this as a rebate program, which is separate from your income tax return.”

So is this taxable income?
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New Member

Is the California electric vehicle rebate taxable income? The amount is $2500.

 I have the same question do we need to enter it on the income tax preparation  in TT software ? some please confirm either way
Highlighted
New Member

Is the California electric vehicle rebate taxable income? The amount is $2500.

"the rebate is issued in a transaction wholly separate from the purchase of the vehicle and cannot really be considered a reduction in the purchase price of the vehicle."

 

I don't understand how they can be "wholly separate" if receiving the rebate is predicated on the requirement that you purchase and own the vehicle?

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New Member

Is the California electric vehicle rebate taxable income? The amount is $2500.

According to CVRP Implementation Manual linked here, CVPR is NOT taxable.

 

The relevant section is on page 11 (pg 14 of the PDF) and reproduced below:

 

The CVRP rebate is not taxable income and the Administrator does not issue a 1099 for
your rebate. The Administrator cannot offer tax advice of any kind. If you have tax
related questions, please consult with your individual tax advisor. 

 

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Employee Tax Expert

Is the California electric vehicle rebate taxable income? The amount is $2500.

Rebates are not normally taxed, they reduce the purchase price, therefore reducing your cost and/or basis;

HOWEVER-

If you took any type of credit for the purchase of the electric vehicle, that might need to be addressed and the rebate would be classified as a recovery.  

Please use the link below for more information. 

IRS Pub 525

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