The U.S. Department of the Treasury and IRS released new guidance on Friday regarding expanded access to clean vehicle tax credits, including how those credits can be transferred from car buyers to car dealers. The guidance includes details on when dealers can be expected to be reimbursed for EV tax credits, with the U.S. Department of the Treasury stating that reimbursement will be provided within 72 hours. Car dealers have previously expressed concern that reimbursement for transferable EV credits would take months.
The guidance states that when a car buyer chooses to transfer an EV tax credit offered on an eligible vehicle to a registered car dealer, that credit will reduce the purchase price of the vehicle, or provide cash to the buyer. The amount provided must be equal to the full amount of the available credit for the vehicle in question. Following the completion of the sale, the dealer must electronically submit information regarding the transfer in order to receive an advance payment for the value of the credit, which the IRS expects to issue within 72 hours of submission.
Under the Inflation Reduction Act, consumers can elect to transfer the new clean vehicle credit (up to $7,500) or previously owned vehicle credit (up to $4,000) to a car dealer starting January 1st, 2024, effectively lowering the vehicle’s purchase price by providing an upfront down payment at the point of sale, rather than waiting for the credit after filing their tax return the following year.
Consumers will need to repay the full value of the transferred tax credit when filing taxes if they exceed the applicable modified AGI limitation. Only verified, tax-compliant dealers will get the benefit of advance payments from the IRS. Car dealers will be able to register via IRS Energy Credits Online, a new website, later this month.
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Comments
This is good news, much easier and cleaner and will also help those that ACTUALLY need the help. My federal tax load, due to being in school and having 2 kids is very low as my deductions are very high. The old rules helped higher earners or those without children, but they didn’t need it as much. A bit ironic to give rebates only to those who don’t really need it.
I know my wife is interested in an EV, this may do it for us.
Just what we don’t need, another tax credit especially for big businesses. You must be blindly going through life to not realize that the consumer is the one that is truly paying for all this EV crap. They do have there place, but the greenies and BIDEN are all wrong in the blame and trying to force everyone to go electric. The car itself may be green, but nothing about that bad battery being buried in the ground will be green, when the time comes. Most of what it takes to make them specs to actually out rolling on the highway is not green either and most likely never will be, even after we are long gone!
It’s odd that uninformed people keep making the same claims.
Where You are right sitting on the dealer’s lot you did pollute more to manufacture an EV, but because they are so much more efficient they break even in terms of pollution at 20-30,000 miles. Also, batteries are so much more recyclable than you think, about as recyclable as oil from your conventional car.
search ” What *Really* happens to used Electric Car Batteries? – (you might be surprised) ” on YouTube and watch recycling in action. 97% of the EV battery is recycled.
You are also right on where the rebate goes its a profit source for the car manufacturers. The idea is to get them to invest so the costs come down.
I think the real rub for people is going to be when the general public figures out the cost savings to EVs.
-No Oil Changes
-Brakes last a really long time because most of the stopping power is used to regen the battery.
-Efficiency, go 250 miles for $9
Where are the cost savings exactly? Take two vehicles:
’24 Blazer 2LT AWD with 2.0L Turbo…MSRP Approx. $42,000
’24 Blazer EV 2LT AWD. MSRP Approx. $57,000
That is a cost difference of $15,000 (at whatever interest rate your bank gives you). I leased a ’22 Blazer 2LT AWD with the 2.0L Turbo. It routinely got over 30mpg on the highway, maybe 25mpg combined. Each tank of gas could go over 500 miles between fill-ups on the highway (my experience).
That being said, how much gas can you get for the $15,000 extra you will pay to not have to go to the gas station (assuming electricity is free, which it is not)? Today, the gas station across the street is $3.44 per gallon. That means you can buy 4360 gallons of gas for a total of $15,000. At 25mpg combined, those 4360 gallons of gas will give you a total range of approx. 109,011 miles. If you drive 12,000 miles per year, that is equal to 9.08 years of driving and fill-ups. It is simple math.
So, again, when you spend $15,000 more to get an EV over its equivalent ICE vehicle, where is the cost savings? You are buying an EV and prepaying for 9 years worth of gasoline that you could have kept in your pocket and not paid 9% interest on. You would have to drive your car over 100,000 miles before you start to see any real savings by skipping the gas station.
But think about all that wonderful clean air we are providing for the world while places like China burn as much coal as they can. The United States is a sucker. We pay out the nose for this and the left thinks it’s justified. Don’t these idiots realize, WE ALL BREATH THE SAME AIR. The climate people don’t have a bad idea, it’s just impractical. Where did our common sense go?
The cost difference is $7500 after the tax credit, so the gas range you stated would be closer to 50,000 miles equivalent until 2032 when the credits sunset. And do you really think that gas will remain at $344/gal over the course of those 4 years? There are already areas in this country where it is double that. Some people value not being exposed to spikes in gas prices. Some people also get satisfaction from conserving gasoline for geopolitical reasons, as in not going to war over gasoline. Just wish the current administration would get with the program on energy independence.
Hey Tim, does it make sense to compare the two Blazers when the ICE version is a cheap, underpowered and cheap crossover and the Blazer EV itself is larger, higher quality with a lot more power? Not even talking powertrain, the new Blazer is a lot more vehicle and far more upscale. I see you continue to ignore your vehicle is premium recommended too.
Ya need to include the cheap gas your burning because of all the oil industry write offs as well as the cost of our military positioned in the ME to keep pricing stable. Take that all away and youm might be paying what Europe has paid for decades PER LITER!..not gallon! So I am ok if you remove all the handouts for ALL industries not just pick and choose or ignore.
Lots of assumptions there with my views and needs that are pretty far from reality. Seems like you’re trying to convince yourself and need to stack the deck to do it. Good luck with that.
No where did I say that are green and that I want green. I do want to save green though, and that would be of the money variety. But I fear the math is far too complicated for some of the knuckle draggers as it requires basic algebra and a 3rd grade reading comprehension.
How long will it be before we hear some dealer somewhere committing fraud on the tax credits?
You are clueless. The consumer applies for the credit and assigns it to the dealer. It’s much more likely the consumer will be the one committing fraud by applying for the credit while exceeding the AGI cap.
How many government programs have been implemented successfully? The plan never includes an audit until they realize the magnitude of the fraud and corruption then it is too late. Their plans while intended to help the consumer never does. In the end, the criminals and politicians are the ones who benefit. If a business managed their financials/budget like our government, evey business would be bankrupt,
It’s always based on your AGI. But if you don’t pay much in taxes and you get that $7500 deducted off your EV purchase, come tax time it states YOU WILL BE LIABLE for the difference if any. Good luck with that as MANY people will wake up with a large amount OWED to the IRS come tax season. NOT GOOD as some buyers will NOT have enough money to pay the IRS and as everybody knows the IRS always gets their money first.
Well obviously, you have to know your income in the year you buy the car for the $7500. Great financial planning. EV’s are not for the poor.
It’s just another government program that wasn’t clearly thought out that will confuse consumers and be abused by dealers and third-party finance agencies. Corruption will run rampant and in the end the consumer will suffer. Just look at the financial incentive programs for businesses, and individuals during the pandemic: billions stolen, no audit trail, promised free loans that now have to be paid back etc…….The only people who win on government programs are the thieves.
As many have also asked…… “How the heck is this going to work”!?
“Consumers will need to repay the full value of the transferred tax credit when filing taxes if they exceed the applicable modified AGI limitation.”
Also, if a dealer gets 4-grand for a used car, won’t they just jack the price up, otherwise private sellers would have to cut their price by an additional $4,000.
The government is involved so that means a disaster is on the way. If you do not have a tax liability of $7500.00 you will have to pay the difference…buyer beware.