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Want to buy one of GM's electric cars? Better act fast

  • The full $7,500 tax credit for buying one of GM's green cars starts phasing out on April 1
  • On that date, it'll drop to $3,750, and on Oct. 1 to $1,875 before ending completely in April 2020
  • That's because GM has hit the limit of 200,000 EVs sold with the full credit amount

Consumers eyeballing one of General Motors' electric vehicles may want to act fast: The IRS said Tuesday that a $7,500 federal tax break for purchasing the automaker's plug-in models begins to wind down by the end of March.

Starting April 1, the tax credit for GM cars such as the Chevrolet Bolt or Cadillac CT6 hybrid will fall to $3,750. The credit will decline further to $1,875 on Oct. 1 before phasing out entirely next year after March 31.

The Obama administration created the tax break -- known officially as the "Plug-In Electric Drive Vehicle Credit" -- in 2008 to both spur automakers to go electric and induce consumers to switch to greener cars, which tend to be pricier.

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Under IRS rules, buyers can get the full tax break through the fiscal quarter in which a carmaker delivers its 200,000th electric vehicle. But five quarters after a manufacturer reaches that threshold, the credit disappears. GM hit that limit toward the end of last year.

The tax subsidy for Tesla, which reached the 200,000 vehicle limit last summer, started to wind down in October and is now $3,750 per car. Tesla in January slashed the price of three models by $2,000 to help offset partial loss of the tax credit. 

GM previously said it plans to roll out at least 20 new electric vehicles around the world by 2023.

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