The U.S government has officially started allowing electric vehicle tax credit to be used at point-of-sale and has already reimbursed auto dealers over $135 million.

As of January 1st, 2024, The United States Treasury has begun to allow auto buyers to effectively lower the purchase price of electric vehicles by using their tax credit in advance at the point-of-sale. In previous years, consumers could only receive the $7,500 new electric vehicle credit or $4,000 used EV credit when they filed annual tax returns later on. According to Automotive News, this tactic has proved popular and "the Internal Revenue Service has received more than 25,000 time of sale reports, including more than 19,500 - or 78 percent - with advance payment requests and approximately $135 million has been paid to dealers since Jan. 1" ( 

However, there are some restrictions on eligibility of the upfront tax credit, such as income and dealership. The legal income limit for new vehicles is $300,000 for married couples and $150,000 for individuals. Additionally, not all car dealers are registered yet, but the numbers are quickly on the rise. "As of Feb. 6, more than 11,000 dealers had registered in the IRS portal, according to a Treasury official speaking on background. Of those, 74% — more than 8,200 — are registered to make advance payments of transferred clean vehicle credits to consumers" (CNBC). 

It is important to note that although the tax breaks are now available at the time a vehicle is purchased, consumers can still choose to pay the full price and receive the credit with their regular annual tax returns. Some may choose this option still because if buyers are later found ineligible of the credit, they will have to pay it back along with their taxes.

What do you think of this new process? Would you prefer the tax credit upfront or later on?


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