2023-10-09 14:56:33
Starting in January, and as a point-of-sale rebate, the U.S. Treasury Department issued new guidance on how a $7,500 EV tax credit can be used.
Currently, consumers can only take advantage of the $7,500 credit for new electric vehicles or the $4,000 credit for used electric vehicles when they file their tax returns the following year.
Starting Jan. 1, consumers can transfer the credits to a car dealer, effectively lowering the purchase price of the vehicle, a change that may help boost sales of electric vehicles.
Under the guidance issued Friday, consumers will need to certify that they meet income limits to qualify for the tax credit or will have to pay the government when they file their taxes.
For new vehicles, the adjusted gross income limit is $300,000 for married couples and $150,000 for individuals.
Congress passed a sweeping overhaul of electric vehicle tax credits in August 2022 as part of the $430 billion Inflation Reduction Act (IRA).
The Treasury is also publishing more details on registration requirements and transfer mechanics for car dealers.
Distributors will need to register through a new IRS website to offer the credits. Starting in January, dealers can submit vehicle sales to the IRS and receive payment of tax credits within 72 hours.
Under proposed rules released Friday, credit transfers and advance payments typically would not affect dealers’ tax liability and dealer payments would not be part of a consumer’s gross income.
The 2022 IRA law required vehicles to be assembled in North America to qualify for any tax credits, eliminating nearly 70% of eligible models at the time. On January 1, new price caps for qualified electric vehicles and limits on buyer income went into effect.
In April, the Treasury implemented new rules setting the sourcing of battery components and critical minerals to qualify.
The Biden administration is yet to issue rules later this year detailing what constitutes a “foreign entity of interest” that will then disqualify electric vehicles from receiving credits if they have battery components or if the batteries contain critical minerals from a foreign entity. of interest.
The Environmental Protection Agency has proposed rules that it predicts will result in 67% of new vehicles being electric vehicles by 2032.
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