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Need another incentive to buy an electric vehicle? The Biden administration just gave you one.
New guidance from the Treasury Department, released on Oct. 6, explains how the $7,500 tax credit for electric vehicle purchases can become cash that the buyers get when they purchase their car.
Right now, when you buy an eligible EV in the U.S., you can use up to $7,500 worth of credit when you file your tax return next year.
Under the new scheme, effective January 2024, buyers should be able to transfer the tax credit to a car dealer as they purchase the car, meaning they could basically get the car for that much less.
There’s a big difference between buying a car for less right now and getting a tax credit that you can only use next year, so it’s likely that the new guidance will further increase the already booming EV sales.
Not all EVs will qualify. For example, only cars “powered to a significant extent by an electric motor with a battery of 7 kilowatt hours or more” will be eligible for the credit. A list of vehicles that qualify can be found over at fueleconomy.gov.
There are also a few steps both dealers and consumers will have to take before they can take part in the scheme. Participating dealers will have to register on a new IRS website, and buyers will have to attest that they meet income limits in order to qualify for the tax credit. Check out the updated FAQ from the IRS here.
The new guidance is part of Biden administration’s efforts to encourage EV ownership, with the goal of having 50 percent of all new vehicle sales be electric by 2030.
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