The US Treasury Department has issued new guidelines for the electric vehicle (EV) tax credit, which will likely be converted into a point-of-sale rebate starting in 2024.
The US Treasury Department has released new guidelines for the $7,500 electric vehicle tax credit, which is likely to be transformed into a point-of-sale rebate come January 2024. This means that consumers will be able to receive the credit upfront when they purchase an electric vehicle, rather than having to wait until they file their taxes the following year. At present, the tax credits on the purchase of EVs is capped at $7,500 for a new EV and $4,000 for a used one.
To qualify for the tax credit, consumers will need to meet certain income requirements. For new vehicles, the adjusted gross income limit is $300,000 for married couples and $150,000 for individuals. Consumers who do not meet these requirements will have to repay the government the amount of the tax credit when they file their taxes.
In addition to the income requirements, vehicles must also be assembled in North America to qualify for the tax credit. This is a new requirement that was included in the Inflation Reduction Act, which was passed in August 2022.
Last year, the US registered its best-ever sales numbers in the electric vehicle segment as it clocked around 9,19,500 units, which is nearly two and a half times more than the units sold in 2018 – the year when the EV game in the country started to shape up with a strong demand for Tesla’s Model 3.
To facilitate the transfer of tax credits from consumers to car dealers, the Treasury Department is also developing a new IRS website where dealers will need to register to offer the credits. With this procedure in effect, the dealers will be able to submit EV sales to the IRS and receive payment for tax credits within 72 hours of submission.
The Treasury Department is also working on rules to define what constitutes a “Foreign Entity of Concern.” EVs that incorporate battery components or batteries containing critical minerals from foreign entities may be disqualified from the tax credit.
