The U.S. government has recently reimbursed auto dealers with approximately $135 million in advance point-of-sale consumer electric vehicle tax credit payments since the beginning of the year up to Feb. 6, and this has been seen as a significant boost to the electric vehicle industry.
Before 2024, U.S. auto buyers could only avail themselves of the $7,500 new electric vehicle credit or $4,000 used EV credit when they filed tax returns the following year. However, beginning Jan. 1, consumers can transfer the credits to a car dealer at the time of sale, which lowers the vehicle’s purchase price, making it even more attractive for buyers.
This change in policy has been met with a great response from the public, as the Internal Revenue Service has already received over 25,000 time-of-sale reports, with more than 19,500 having advance payment requests, and approximately $135 million has been paid to dealers since Jan. 1, as per the Treasury’s statement.
Deputy Treasury Secretary Wally Adeyemo said, “One month into the implementation of this provision, there is strong demand for this new upfront discount, which will continue the momentum in growing this industry in the United States.”
This policy change occurred when the Treasury issued guidelines to wean the U.S. electric vehicle supply chain away from China. The number of EV models qualifying for U.S. EV tax credits fell on Jan. 1 to 19 from 43, but since then, Volkswagen regained eligibility for versions of its ID.4 EV.
Consumers must attest they meet income limits to qualify for the tax credit at the time of purchase or repay the government when filing their taxes. The adjusted gross income limit for new vehicles is $300,000 for married couples and $150,000 for individuals.
The August 2022 Inflation Reduction Act law reformed the EV tax credit, requiring vehicles assembled in North America to qualify for any tax credits, eliminating nearly 70% of eligible models. It also created a used EV tax credit, lifted 200,000-vehicle manufacturer caps on credits, imposed income and vehicle price restrictions, and extended credits to leased vehicles.
This policy change significantly boosts the electric vehicle industry, demonstrating the government’s commitment to promoting sustainable transport and reducing carbon emissions. With more than 11,000 U.S. auto dealers having registered for the program, including over 8,000 registered for advanced payments, the electric vehicle industry is expected to continue its growth in the United States, paving the way for a cleaner and more sustainable future.
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