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Buying an EV? You won’t have to wait for your tax credit anymore in 2024

Credit: Tesla

The U.S. Government expanded the electric vehicle tax credit program and access to those credits to help dealers expand their businesses and consumers take advantage of cost savings for buying an EV.

On Friday, the U.S. Department of the Treasury and the IRS announced new guidance that would lower costs for consumers and help dealerships benefit from the Inflation Reduction Act by providing EV credits at the point of sale for both new and used EVs. It comes in response to studies that showed consumers would rather have an immediate rebate when they are buying a car, as opposed to waiting for a credit that can be applied to taxes the following year.

The new IRA guidance, which was announced this morning, allows consumers to transfer their new clean vehicle credit of up to $7,500 and/or their $4,000 credit for a used EV to a car dealer, effective January 1, 2024. The price of the vehicle will automatically be lowered by $7,500 if new and $4,000 if used at the point of sale, rather than having the consumer wait until the following year to claim their credit.

Vehicles that qualify for this new guidance under the IRA must be purchased under the consumer clean vehicle credit.

“President Biden’s Investing in America agenda is focused on lowering transportation costs for consumers and giving American car companies the tools to lead the market,” Chief Implementation Officer for the IRA, Laurel Blatchford, said. “For the first time, the IRA allows consumers to reduce the up-front cost of a clean vehicle, expanding consumer choices and helping car dealers expand their businesses. The IRS has focused on streamlining this process for car dealers as part of its commitment to improving service and helping taxpayers claim the credits they are eligible for.”

Dealers will be able to register for the program on a new IRS website known as IRS Energy Credits Online later this month. In January, registered dealers can submit clean vehicle sales information to the IRS and receive payment for transferred credits. The IRS expects to issue advance payments within 72 hours.

Dealers can either have the purchase price of their vehicle reduced or be given cash by the dealer.

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Buying an EV? You won’t have to wait for your tax credit anymore in 2024
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