Tax Credit Rules for Efficient Vehicle Purchase: IRS-Regulated New Tax Credit Regulations for the First-Principles Use of an Online Portal

The new guidance lays out how dealers can effectively reduce the price of an EV by as much as $7,500 at the point of purchase rather than the customer having to wait until they file their taxes to claim the credit.

Those purchasing an EV would need to attest that they meet the individual requirements — like that they’re purchasing the vehicle for personal use, they’re not a dependent on anyone’s taxes, and they’re under the income limit.

A study from George Washington University found most car buyers preferred to receive the credit immediately.

Now, dealers are able to apply the credit at the time of purchase, or use the credit as cash for the buyer. The participating dealers need to register for the IRS portal in order to apply the credit. Buyers will have to confirm to dealers that they fall within the income limits outlined in the tax credit rules before accepting the rebate.

Some dealers have expressed concerns about having to foot the bill for customers while they wait for the government to pay them back. The so-called “Cash for Clunkers” program from 2010 gave owners a cash incentive to trade in their older, less efficient vehicles. At the time, dealers complained about not receiving repayments in a timely fashion.

This time will be different, the IRS promises. According to the guidance, most dealers will receive repayment for the rebate within 72 hours and will be able to track the progress in real time through an online portal.

An Impact of Tax Credits on the Prices of Electric Cars and Implications for Themselves to a New Buyer’s Choice

There are limits on how much a car can cost to get a credit, but there is still an income cap for buyers. Complicated rules regarding how the cars are made will keep some models from being eligible.

That addresses one major customer concern. Buyers have to research and do a lot of homework to figure out if an electric vehicle will qualify for a tax credit.

That functioned like an income minimum, since many low- and middle-income families owe less than that in taxes. It was another challenge for people trying to figure out how much the credit was worth.

There are caps on the income for an individual and heads of households, and there are caps on the income for married couples.

The income limits for a new vehicle are $150,000 adjusted gross income for an individual, $225,000 for a head of household and $300,000 for a married couples filing jointly or surviving spouses.

The changes will make a tremendous difference according to the vice president of the electric vehicle practice atJD Power. “If you’re going to finance at a higher price, you have to make more payments, and you’ll have to wait for the tax rebate down the line,” he said.