Starting in January 2024, car dealers may offer instant rebates to customers who buy certain electric vehicles, according to new IRS instructions. According to the memo, qualified automobiles could be eligible for a tax credit worth up to $7,500. To what extent an EV and its buyer satisfy these standards, as well as when a car is actually purchased, will determine how much credit they will receive.
An electric vehicle must have a minimum battery capacity of seven-kilowatt hours to be eligible. If a buyer’s adjusted gross income is higher than a set limit—$300,000 for married couples filing jointly and $150,000 for the majority of single taxpayers—they are not eligible for the credit. Additionally, the manufacturer’s suggested retail price for the EV cannot go over predetermined pricing ranges. The cap, for example, is $80,000 for pickup trucks and sport utility vehicles. The benefit for less expensive automakers is severely limited by the requirement that average electric vehicles not cost more than $55,000 in order to qualify. Although it’s disappointing that you can’t obtain a refund for a $81,000 Porsche Taycan, you may be able to get the advantage of a $27,400 Nissan Leaf S.
If they were purchased and weren’t meant for resale, certain EVs purchased before 2024 might also be eligible for reimbursement. The IRS states that the potential rebate for automobiles put into operation on or after April 18, 2023, will depend on a number of variables, including the make and battery capacity of the vehicle. In order to stop dishonest consumers from purchasing an EV, reselling it, and keeping the rebate, limitations for ownership duration have also been put in place.
On FuelEconomy.gov, the IRS lists qualifying cars, such as battery electric, plug-in hybrid, and fuel cell automobiles. It states that as new vehicle eligibility rules go into effect, the list will be updated.
Overall, the IRS’s proposed advice is consistent with the Biden administration’s objective of having EVs account for 50% of new car sales by 2030. Instead of waiting to receive any sort of tangible compensation for their purchase after filing their taxes, it is hoped that an instant rebate will encourage more people to acquire an electric automobile. The Zero Emissions Transportation Association’s executive director, Albert Gore, applauds the IRS memo and states that “this guidance makes it easy for everyone to access the IRA’s new and used electric vehicle tax credits at the point of sale.”
