- The revamped 2024 IRA program allows buyers to receive tax credits of $7,500 off new EVs or PHEVs priced under $55,000 or SUVs/trucks priced under $80,000 at the point of sale.
- Car dealerships participating in the program must meet requirements and will be reimbursed for the discounted price within 72 hours.
- Used EVs priced under $25,000 will still qualify for a $4,000 rebate, also at the point of sale.
Beginning January 1, 2024, the United States Treasury Department is offering point-of-sale tax credits for consumers who purchase new or used EVs or PHEVs. The new program works by transferring tax credits to dealerships at the point of sale, rather than asking consumers to wait until they file their taxes.
Eligibility for IRA Tax Credits
The Inflation Reduction Act offers eligible buyers in 2024 a $7,500 tax credits for purchasing a new EV or PHEV, or $4,000 for a used EV or PHEV. In previous years, the tax credit was only available after buyers filed their taxes and proved they earned an adjusted gross income under $150,000.
Models that qualify for the IRA tax credits include most made by Rivian, Tesla, Ford, and General Motors, as well as the Volkswagen ID.4 and Nissan Leaf. The Jeep Wrangler 4xe, Grand Cherokee 4xe, and Chrysler Pacifica PHEV qualify for the tax credit.
Some BMW and Audi models are also manufactured in North America. Lucid manufactures models in the US, but many are priced over the IRA maximums. With many new 2024 EV models arriving soon on dealership lots, expect the list of qualifying EVs to change.
Instant Credit Toward a New or Used EV in 2024
The federal government decided to make changes to incentivize shoppers to choose electrified vehicles. The change also allows all car buyers to take advantage of the instant EV discount regardless of their tax burden.
EVs must meet strict requirements to qualify for the $7,500 and $4,000 2024 tax credits. They must be assembled in North America. New electrified SUVs, vans, and trucks must have sticker prices under $80,000, while cars must be priced under $55,000. Used electric vehicles must also meet the manufacturing requirements and be priced under $25,000.
How Dealerships Qualify for the Benefit
If car dealerships want to offer the benefit to customers, they must follow special rules. First, they must have a state or local business license and be registered with the Internal Revenue Service to offer credit at the point of sale.
Dealerships must also submit proper paperwork when making an EV sale. If they follow those rules, they should receive payments from the government within three business days.
How Buyers Qualify for the Instant Credit
When purchasing an EV, buyers must provide evidence that they do not exceed the income limits established for the program. The adjusted gross income limits are:
- Single Filers: $150,000
- Head of Household: $225,000
- Married Filing Jointly: $300,000
Buyers must be below the income limits either during the year they purchased the vehicle or the previous year. If they exceed the limits, they’ll have to pay them back when filing.
Laura Blatchford, chief implementation officer for the Inflation Reduction Act said, “The IRS has focused on streaming this process for car dealers as part of its commitment to improving service and helping taxpayers claim the credits they are eligible for.”
Additional Changes to the 2024 Inflation Reduction Act
The IRA could see more car shoppers benefit from the tax credit thanks to battery-material sourcing requirements. The program will begin to offer more benefits based on the sourcing of battery materials. The battery-sourcing changes could disqualify some EVs, and it could force some vehicles to be eligible for partial rebates.
During the first three quarters of 2023, EV sales rose nearly 51% over the same period in 2022. In the US, the EV market is up to 7.5% saturation. Researchers found that car buyers would prefer to get a $7,500 discount when purchasing an EV. They don’t want to wait until filing their taxes.
This new point-of-sale program is designed to be easy for dealerships who can give their shoppers a $7,500 discount, rather than asking them to pay full price and wait for their tax return. Some dealerships worry that the federal government won’t pay them within 72 hours. The Treasury Department has called dealerships to ease concerns about quick payments.
State and Utility Company EV and Charging Station Rebates
Most states offer additional incentives for purchasing an EV or PHEV. Many local utility companies offer rebates and incentives to help reduce the cost of installing at-home EV charging stations. You can find the most recent information here.
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