The Treasury Department published new guide Friday outlines how car dealers can give customers instant access to electric vehicle rebates starting in January 2024. It’s the latest move by the Biden administration to lower the cost of electric vehicles in hopes that more people they buy them.
The new guidance lays out how dealers can effectively reduce the price of an electric vehicle by up to $7,500 at the time of purchase, rather than the customer having to wait until they file their taxes to claim the credit.
The administration hopes that by applying the credit immediately, more people will be convinced to consider an electric vehicle for their next purchase, helping achieve the goal of electric vehicles accounting for 50 percent of new car sales by 2030. .
The new guidance sets out how dealers can effectively reduce the price of an electric vehicle by up to $7,500 at the point of purchase.
The electric vehicle tax credit, also known as the “clean vehicle tax credit” or 30D, if you like the IRS code – can offer up to $7,500 off the purchase of a new electric vehicle. The credit was approved as part of the Inflation Reduction Act of 2021, which was presented as President Joe Biden’s main effort to fight climate change.
Under the old rules, a person would pay the full price for a new electric vehicle and then wait until the next time they file their taxes to apply to receive a nonrefundable credit of up to $7,500 for a new electric vehicle and $4,000 for a used one.
Now, dealers can apply the credit at the time of purchase, effectively turning it into a discount, or offer the buyer a cash refund. Participating dealers will need to register through an IRS portal to apply the credit at the time of purchase. Buyers will need to confirm to dealers that they are within the income limits outlined in the tax credit rules before accepting the refund.
A dealer may provide the purchasing taxpayer with a financial benefit in cash or in the form of a partial payment or down payment for the purchase of the vehicle. The taxpayer benefits by receiving an immediate financial benefit at the time of the sale, rather than having to wait to file a tax return and claim the credit.
Some dealers have expressed concern about having to pay customers’ bills while waiting for the government to pay them back. He worries about a repeat of the so-called “Cash for Clunkers” program of 2009, in which dealers offered a cash refund to owners who traded in older, less efficient vehicles. At the time, merchants complained about not receiving refunds on time.
This time it will be different, the IRS promises. According to the guide, most dealers will receive the refund refund within 72 hours and will be able to track progress in real time through an online portal.
EV advocates praised the new rules, arguing they will help simplify what was previously a more complicated process. “This guidance makes it easier for everyone to access IRA new and used electric vehicle tax credits at the point of sale,” Albert Gore, executive director of the Zero Emissions Transportation Association, said in a statement. “A streamlined process will maximize the benefit of these credits, not only for drivers and their communities, but for the entire electric vehicle supply chain.”