Nine out of ten American consumers who buy an electric vehicle are electing to get the $7,500 EV tax credit offered under the Inflation Reduction Act as a direct up-front advance payment, a U.S. Treasury official revealed.
The report by CNBC says the option to take the up to $7,500 tax break as a down payment on an EV, an up-front discount, or even an actual cash payment to the buyer has been overwhelming popular among U.S. citizens looking for a new electrified ride.
Before January 1st, 2024 the tax credit could only be taken as a deduction in the following year, with for example a 2024 electric vehicle purchase becoming an up-to-$7,500 deduction on the consumer’s income tax form filed in early 2025. However, after New Year’s Day this year, the option to get the credit as an immediate discount or cash payment went on offer as an alternative.
In addition to providing an immediate benefit, the advance payment is always for the full qualifying amount, whereas buyers with low tax liability may not get the full clean vehicle credit even if the vehicle would technically qualify for it. A used electric vehicle can potentially be eligible for up to a $4,000 advance credit.
The EV itself will still need to qualify for the tax credit before the advance payment is available, with some vehicles fully qualifying and others eligible for some or none of the credit. According to a treasury representative, “demand is high four months into implementation of this new provision,” with about 100,000 qualifying sales since the start of the year adding up to $580 million in advance payments so far in 2024.
After providing the advance payment to the buyer in the chosen form, the dealership electronically submits the transaction to the government. The dealer will be reimbursed for the amount of the credit within 72 hours according to the Treasury, countering earlier fears that the reimbursement would be unavailable for weeks or month.
GM Authority previously provided information on determining if a GM vehicle qualified for the tax credit. After several models lost eligibility based on the sourcing of certain battery components, General Motors changed its electric vehicle battery logistics, making the Cadillac Lyriq eligible for the full $7,500 again in February, with the Chevy Blazer EV regaining eligibility in March through the same process.
Several used GM electric vehicles qualify for the $4,000 used vehicle credit as well, including several model years of the Cadillac CT6 PHEV, the Cadillac ELR, the Chevy Bolt EV, the Chevy Bolt EUV, the Chevy Spark EV, and the Chevy Volt.
Subscribe to GM Authority for more GM electric vehicle news, GM business news and around-the-clock GM news coverage.
Comments
IMO, there’s a lot of misunderstanding about the $7500 tax credit and way too many made a huge deal about it. The fact is that many won’t get much, if any, benefit from it if used at the time of your taxes.
In 2022 I ordered my Bolt EV and it came in January of 2023. I picked it up and the following day at work I purposely changed my withholding so that I would have less taxes taken from my check. So I was able to see an immediate and year long benefit by having a slightly higher take-home pay. My thought was that I may then owe taxes for 2023 and the $7500 would help. Well my standard deductions were still enough and I got a refund without using the tax credit at all. For me, it was a joke.
Early this month I decided to get another Bolt (this time the fancier 2LT with extra features) and used the point of sale $7500. Between that and a little dealer discount and a GM card incentive totaling $650.00, the price of this fancier Bolt was way less than what I paid for the first one. At least in my situation, the bottom line was that the “federal income tax credit” was a joke and the point of sale tax credit was the only way to go.
You should have contacted your accountant before the purchase. Obviously, you don’t make enough money.
mick1: What you just said is exactly the misunderstanding that too many have.
I’m confused, you did not get the 7500, or you got a refund of 7500+ and so you are disappointed? I thought the only requirements were you did not make too muck money (like 250+ I think) or you did make make enough money because the tax credit was limited to taxes owed. Some credits are given beyond the tax owed. If you got the full 7500 and now another 7500 on this one, well, your welcome as someone who pays taxes.
mkAtx: On the first Bolt, you were not allowed (yet) to take the point of sale $7500 off at the dealer, so I was trying to work it out to my benefit. The next day I changed my withholding to take less tax out, thus where I’d maybe have a tax “burden” and be able to utilize the 7500 or at least part of it.
When I had my tax professional do my taxes in February, and without using the 7500 tax credit, my standard deductions still allowed me a tax refund (although smaller since I changed my withholding). So I did NOT use the tax credit as it would not work for me.
When I decided to pick up the fancier 2LT Bolt, I was able to use the point of sale 7500 at the dealership. So yes, the second time I was able to use it but not the first when I did my taxes. That’s the part of this that many aren’t understanding. Before I got my first Bolt I spoke with my tax lady and we made a plan. To be honest, there’s only a small number of buyers who can actually use that as a tax credit. Many may qualify, but if you normally get any refund, it doesn’t do you much good if any.
Your “refund” has nothing to do with it. Its is offset from taxes paid. Taxes paid include your withholding and any estimated payments you made. If your tax burden was less than 7500, then you only received what you paid. What really changed I think is now the credit is refundable, so it does not matter what your tax burden is. So even if the dealer did not refund you the credit at point of sale, this time you’d get the full benefit come next year since the credit is refundable. Taxes, the dirty details matter.
Not sure I understand what you are trying to say. But I’ll take the advice of my professional tax person that I’ve been using for the past 7 years.
All I can tell you is this: Had I not changed my withholding in early 2023, I would have paid more tax per check, but I would have gotten a larger refund. According to the tax preparation specialist, the only way I’d have been able to take advantage of the $7500 on my taxes would have been if I owed money to them. She said that they won’t increase the refund by that amount, but it would need to reduce my taxable income.
The best way I can say it is that you must have a tax burden (you owe money) in order for it to help. And if you owe $5,000 in tax, then you would only use 5000 of the 7500. I know. Clear as mud.
Let me give you just 2 examples of “professional” advice friends have gotten from accountants. Case 1, a friend was self-employed so should have been paying estimated taxes on her income. She was not. I told her she needed to pay quarterlies, she said her accountant said it was not necessary. Long story short, she was dinged by the IRS for not paying quarterlies, although it took a couple years to catch up to her. A different friend moved and changed jobs. His professional’s advice was to take moving expenses. I said isn’t the new job close to the old jobs? His response was yeah but I moved 75 miles. I said, it doesn’t matter, it is the distance to the new job that matters. Long story short, IRS sent him a bill for the moving deduction. My point, you can get advice, but in the end you are responsible. Understand your taxes. So google refundable credits and understand what is going on. Really not complicated. It boils down to what you owe the government(line 16/1040) is the limit of the refund.
Well I use H and R Block and have for enough time to trust them over what I can Google (we all know everything you read online is totally correct, right?). Not only that, but H and R Block isn’t some little accountant in some corner office building renting a coubacle for one.
So it really doesn’t matter to me. I couldn’t use the “tax credit” for nothing and I was able to use and thus reduce the price of my 2LT Bolt by the 7500. So I’m good. Other can fend for themselves.
It only works for people who will OWE at least that much. For one if you want or need to i.e. take 401k funds you could have taken out enough to AVOID that 401k taxation or equivelant or just ensure any writeoffs are not enough to reduce the owed taxes when one has higher income. Usually singles making 100k or more have a higher tax rate and often just writing off i.e. mtg, SALT, etc. is not enough to wound up with a 0 net Fed tax owed like it was for me during my volt take. If I were to buy one now I would increase that tax need with a 401k withdrawal for that year. The other option is buying one of the cars that GM had that temporarily did NOT qualify but yet GM was telling dealers to take off 7500 equivalent which then relies on no taxation on the buyers part. But those vehicles should be getting in lower quantity to still get rid of but some still seem to be around still.
What they needed to allow is rollover of unused part of the credit like the solar purchase credit allows for because the car credit you dont get if you dont owe and yes can lose part or all of it.
Rich people didn’t become rich by being stupid. Take the money and run.
Simplifying the Tax Credit is good for everyone involved.
In the past, we purchased (2021) and were left with, well, you have to figure it out, but it might be eligible if you meet criteria X Y Z and so on.