Most Americans who buy qualified new electric cars choose to claim their related tax credit at the time of sale straight from auto dealers, instead of waiting to do so during tax season, according to recent statistics released by the Treasury Department. Roughly 90% of customers who qualify for the $7,500 “new clean vehicle” tax credit choose to have the benefit applied right away. Dealers may now provide an instant discount on electric automobiles thanks to the upfront credit option provided by the Inflation Reduction Act, which President Joe Biden signed in 2022. A partial payment, a down payment, or even cash back are possible formats for this reduction. The IRS then pays the dealer back.
U.S. car buyers were limited to claiming the $4,000 used EV credit or the $7,500 new EV credit on their tax returns for the following year before 2024. However, beginning in 2024, the Treasury Department claims that the Internal Revenue Service has processed almost 100,000 time-of-sale electric vehicle credit reports and has paid dealers over $580 million in advance since January 1.
Over 85,000 of these reports, according to the Treasury, were for brand-new electric vehicles, and more than 90% of the buyers of these vehicles asked for the maximum advance payment of $7,500. Furthermore, over 15,000 time-of-sale data for pre-owned electric vehicles were found, and almost 75% of these purchasers asked for a $4,000 advance payment. Treasury spokesman Haris Talwar pointed out;
“Demand is high four months into the implementation of this new provision.”
Updated EV Tax Credit Rules and Eligibility for 2024
Customers must verify that they fulfill certain income requirements in order to be eligible for the electric vehicle (EV) tax credit at the time of purchase; if not, they will have to reimburse the benefit when they submit their taxes. The income ceiling for new cars is $150,000 for single taxpayers and $300,000 for married couples filing jointly. for further information on the Clean Vehicle Credits.
The regulations for the EV tax credit were updated by the Inflation Reduction Act, which was passed in August 2022. It is now required that automobiles be constructed in North America in order to be eligible for any tax benefits. Of the models that were previously eligible, this alteration excluded about 70% of them. Since early February, slightly over 11,000 dealers have registered on the IRS Energy Credits Online platform, making over 13,000 dealers registered in total to enable these cash transactions.
Data from the U.S. Energy Department as of April 15 indicates that 34 new electric vehicle models are qualified for tax benefits in 2024. Tesla, Ford, Chevrolet, Volkswagen, Honda, Nissan, Audi, Rivian, Jeep, Chrysler, Cadillac, Lincoln, and Acura are among the makers of these cars.
Positive Sign for Biden’s EV Push
The high uptake of the instant rebate program is seen as a positive sign for President Biden’s efforts to boost electric vehicle sales and encourage a transition to cleaner transportation. A key feature of the program is its ease of use. Car dealerships handle most of the paperwork, allowing customers to receive the credit immediately and drive away with their new EV at a significantly reduced price.
According to a White House press release, over 9,500 dealers across the country have registered with the IRS’s Energy Credits Online program. This indicates a strong willingness from the auto industry to participate in the initiative. The success of the program is expected to further accelerate EV adoption. Consumers are presented with a more affordable option, and dealerships benefit from a streamlined sales process.
