Following new IRS and DOE instructions, EV customers can now earn a $3,750 or $7,500 federal tax credit as a discount at the time of sale for chosen car models.
IRS Allows Direct Discount on EV Tax Credit at Point of Sale
Buyers had to wait until tax season to claim the EV tax credit, which reduced their tax payments. The credit now discounts the sale price if buyers fulfill the Democrats’ $740 billion Inflation Reduction Act’s income restrictions. Without income verification, buyers can “transfer” credit to the dealer for the discount.
For 2024, EV buyers can get $300,000 for married couples filing jointly, $225,000 for heads of households, and $150,000 for others.
Dealers operate the point-of-sale immediate EV refund program, and the IRS does not verify income. Instead, buyers must promise compliance. IRS plans to produce an example disclosure form for dealers to disclose income limits to buyers.
Tax Experts Express Concerns Over Potential Fraud in New EV Tax Credit Program
New laws may lead to tax fraud, according to tax experts like Tax Foundation’s Scott Hodge. dealers relying on buyers’ self-verification of income may lead to errors, fraud, and IRS issues. Hodge expects Income accuracy issues and a rise in program fraud and error investigations in the future years.
Although worries remain, the quick point-of-sale discount scheme attempts to streamline the EV buying process and promote electric automobiles.