WASHINGTON DC – Consumers no longer have to wait to file their annual tax returns to get a tax break for the purchase of a new electric vehicle. At the start of 2024, the federal “new clean vehicle” tax credit became available as a point-of-sale discount — worth up to $7,500 — at car dealerships.
That means participating dealers can give eligible consumers an immediate break on an EV’s purchase price, perhaps via a partial payment or down payment on the vehicle or a cash payment to buyers.
Buyers of used EV models are also eligible for an upfront price discount from dealers. That tax break for a “previously owned clean vehicle” is worth up to $4,000.
Prior to January, car buyers had to wait until tax season the year following their purchase to claim these tax credits.
Aside from that delay, waiting until tax season carried an additional financial hurdle for consumers because the value of their total EV tax credit couldn’t exceed their annual tax liability, since the credit is “nonrefundable.”
That meant many consumers — especially lower earners, who tend to have smaller tax bills — didn’t qualify for the full $7,500.
Now, participating car dealers can pass along the credit’s full value regardless of a household’s tax liability, so long as the buyer and vehicle meet other eligibility criteria.
“It has so many benefits,” Ingrid Malmgren, policy director at Plug In America, said of the new rules. Plug In America is non-profit educational organization.
Consumers can still opt to receive the financial benefit at tax time instead of receiving it as an advance payment of the tax credit.
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