Based on the Treasury, the US government has refunded auto dealers approximately $135 million in advance point-of-sale consumer electric vehicle tax credit payments from the beginning of the year through Feb. 6.
Before 2024, American car buyers were only eligible for either the $7,500 credit for new electric vehicles or the $4,000 credit for used electric vehicles when they filed their tax returns the next year.
As of January 1, customers will be able to transfer the credits to a car dealer during the sale, which will reduce the purchase price of the vehicle.
According to the Treasury, the Internal Revenue Service has collected over 25,000 time of sale reports.
Of these, more than 19,500, which is 78%, have included advance payment requests. Dealers have received around $135 million in payments since Jan. 1, as revealed by the Treasury.
Dealers Embrace Prepayments for Electric & Used Vehicles
The requested advance payments are 17,500 for new electric vehicles and 2,000 for used vehicles. Over 11,000 auto dealers in the US have signed up for the program, with over 8,000 enrolling for advanced payments.
January saw several electric vehicles becoming ineligible for tax credits due to new battery sourcing regulations.
In December, the Treasury released guidelines with the goal of shifting the US electric vehicle supply chain from China.
As of January 1, the number of EV models eligible for US EV tax credits dropped to 19 from 43. However, Volkswagen has since regained eligibility for certain versions of its ID.4 EV.
Income Eligibility Verification for Customers
Customers need to confirm their income eligibility when making a purchase, or they will be required to reimburse the government during tax filing.
For new vehicles, the adjusted gross income limit is $300,000 for married couples and $150,000 for individuals.
The Inflation Reduction Act of August 2022 brought changes to the EV tax credit, now mandating that vehicles must be manufactured in North America to be eligible for any tax credits, resulting in the disqualification of almost 70% of models.
The legislation introduced a tax credit for pre-owned electric vehicles, removed the limit on credits for manufacturers producing over 200,000 vehicles, set restrictions based on income and vehicle price, and expanded credits to include leased vehicles.
