Starting in January, the IRS will make the $7,500 federal electric vehicle tax credit immediately available through dealerships. The Treasury Department announced the update Friday, noting that dealers will have the option to “reduce the purchase price of the vehicle or provide cash to the purchaser.”
The update also applies to buyers taking advantage of the $4,000 used electric vehicle credit.
Congress established the electric vehicle credit when it passed the Inflation Reduction Act in 2022, but to date the IRS has only offered it through tax returns. That meant a long wait for people buying electric vehicles earlier this year. For example, Tim De Chant, TechCrunch’s senior climate editor, said he “hated waiting” for reimbursement after winning an Audi e-tron last year. “We bought our car in April. It took forever,” he added.
Buyers should always make sure they meet the income eligibility criteria (among other rules), whether for the previous or current year. Additionally, only certain electric vehicles are eligible. This remains a sticking point for those interested in vehicles that do notlike Toyota’s RAV4 and Prius Prime hybrids, because they are not assembled in North America.
The IRS says buyers will sign documents to transfer their credit to dealers, and dealers will provide buyers with “required disclosures” including “written confirmation that the vehicle they are purchasing is eligible for credit and the amount of credit”. The IRS says it will send dealers “advance payments within 72 hours.” Buyers will have to repay the IRS later if it turns out they aren’t actually eligible.
People on the site formerly known as Twitter questioned whether dealerships would handle credits fairly. “Will the dealer just inflate the price of the car? » said a user. “I mean, I still want one, but now I’m anticipating even more magical fees added to dealer stocks. :D,” another added.
There do not appear to be any restrictions preventing companies that sell directly to customers, like Tesla and Rivian, from taking advantage of the new IRS system. Rivian did not immediately respond when TechCrunch asked if it planned to take advantage of the update.
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