You May Receive Your Tax Credit Immediately!
Learn the Details and the Cautions

January 2024

Registered EV Dealers May Deliver Immediate Tax Credits to Buyers

The good news has been that purchase of an EV was eligible for a federal tax credit. The less than good news has been that EV buyers/taxpayers had to wait to apply for credits until filing their return for the year of purchase. For example, an EV you purchased in 2022 would be reported on that year’s tax return. The qualifying credit would be applied some time in 2023 to reduce your tax bill by the amount of the credit.

Now, at your (the buyer’s) option, the tax credit in 2024 may be accelerated to the time of purchase. You may transfer the credit to the dealer which is in turn applied to reduce the sale price of the vehicle or a cash payment to you. The dealer will receive reimbursement from the IRS for the credit applied to you.

As an EV buyer, you’ll win by not having to wait until your tax return is filed and processed by the IRS. That means you will immediately enjoy the tax savings of the credit.

The Treasury Department says the near-instant credits of $7,500 for an eligible new vehicle and $4,000 for a qualifying used vehicle should lower purchasing costs for consumers and help car dealers by boosting EV sales.

Dealer Registration Requirement

Effective January 1, 2024, taxpayers may not claim a credit for purchase of a new or used EV unless the dealer has registered with the IRS and submits a seller report via the IRS Energy Credits Online link. A copy of the submitted report must be provided to the customer.
The revised rules include a provision called the “advance payment program.” This feature is anticipated to motivate dealers to offer a cash payment of the credit to the buyer at time of purchase. In turn, the dealer will receive reimbursement from the IRS for the credit paid to the customer. This requires an additional dealer registration at the Energy Credits Online link which enables advance payments 15 days following registration.

EV Eligibility & Taxpayer Qualifications

EV Eligibility: EVs must be manufactured in North America. To qualify for the maximum tax credit of $7,500, sticker prices for new SUVs, vans, and trucks may not exceed $80,000 … new automobiles limited to a maximum sale price of $55,000. Used EVs sale price limited to no more than $25,000 to qualify for maximum credit of $4,000.

Taxpayer Income Qualifications: To qualify, EV buyers are limited to the following adjusted gross annual income either in the year of purchase or the prior tax year.

• Single filers - $150,000
• Joint filers - $300,000
• Head of Household - $225,000

Note: The dealer is not required to verify your income eligibility at the time of sale. However, the dealer is obliged to provide the above income qualifications to you.

Taxpayer Responsibilities: You, the Taxpayer, must claim the credit on your tax return for the year the vehicle was placed in service by filing IRS Form 8936. This Form reports eligibility for the credit and your decision to transfer the credit to the dealer.

Key Takeaways & Cautions

• Remember, car dealers must be registered before buyers can receive the EV tax credit at the point of sale. Be sure to check that your dealer has registered with the IRS Energy Credits Online link and is a qualified dealer under the “advance payment program” described above.
• If the vehicle qualifies for the credit, but you don’t qualify for any reason (e.g., income qualifications exceed the above thresholds) … you must reimburse the IRS for any difference in the amount of eligible credit and the benefit you received from the dealer.

The above presentation is meant as an overview only.
Give us a call and we’ll quickly help you with questions.