The Treasury Department has issued new guidelines that explain how car dealerships can provide customers with instant access to electric vehicle rebates, starting in January 2024. This is part of the Biden administration’s efforts to reduce the cost of electric vehicles (EVs) and encourage more people to purchase them.
The guidance outlines how dealers can effectively lower the price of an EV by up to $7,500 at the time of purchase. US electric car buyers will no longer have to wait until they file their taxes to claim the credit.
By implementing this immediate credit, the administration hopes to persuade more individuals to consider buying EVs. The Biden administration wants EVs to account for 50 percent of new car sales by 2030.
The new guidelines
Previously, the electric vehicle tax credit (also known as the “clean vehicle tax credit” or 30D) allowed up to $7,500 off the purchase of a new EV. However, buyers had to pay the full price upfront and wait until they filed their taxes to receive the nonrefundable credit.
A study from George Washington University revealed that many car buyers, particularly low-income individuals, preferred to receive the credit as an immediate rebate.
Under the new guidelines, dealers can now apply the credit at the time of purchase, effectively offering it as a discount to buyers. Dealers will need to register through an IRS portal to apply the credit. In addition, buyers must confirm that they meet the income requirements outlined in the tax credit rules to receive the rebate.
According to The Verge, dealers have the option to provide a financial benefit to the purchasing taxpayer in cash, partial payment, or down payment for the vehicle.
Certain dealers have raised concerns about being responsible for expenses while awaiting government reimbursement. They fear a reoccurrence of the “Cash for Clunkers” initiative from 2009, when dealers had to provide cash rebates to individuals trading in older, less efficient vehicles. At that time, dealers complained about delays in receiving repayments.
The IRS assures that this time will be different. As per the guidelines, most dealers will be reimbursed for the rebate within 72 hours and can monitor the progress in real time through an online portal.
Supporters of EVs applauded the new regulations, stating that they will simplify what used to be a complex procedure.
Image Source: 2 Epic Evs, https://shorturl.at/bEV19