EV tax credit expanding, issuing immediate credits in 2024

If you’re considering buying an electric vehicle, it’s about to get way easier to take advantage of major federal tax credits.

Starting Jan. 1, 2024, you no longer have to wait to get a $7,500 credit on new EVs or up to $4,000 back on used electrics. The Treasury Department laid out guidance so that car buyers can get the credits at the point of sale.

If you buy an electric vehicle in 2023, you have to wait until you file your tax return to claim the $7,500 or $4,000 tax credits. On top of that, you must have a tax bill that the credit could be put towards. In other words, the IRS won’t send out checks to qualified EV buyers, but they will forgive debts up to the amount of the credit.

Things change on Jan. 1, 2024. At that time, you can go to a participating dealer, do a little extra paperwork when buying your EV, and get $7,500 or $4,000 in the form of a down payment or cash. The new rules also eliminate the tax liability requirement, so it won’t matter if you owe the IRS or the IRS owes you.

In order for this to work for you, dealers have to do their part too. They must register on a new website, IRS Energy Credits Online, and follow other rules. Be sure to ask if a dealer is participating in this program before making a purchase.

To qualify for the $7,500 new EV credit, you must:

• Buy it for your own use, not for resale
• Use it primarily in the US
• Your modified adjusted gross income may not exceed $300,000 for married couples filing jointly; $225,000 for heads of households; or $150,000 for all other filers.

If you claim the credit, but your income ends up exceeding the limits, you’ll have to pay back the full credit.

The vehicle also has to meet critical mineral requirements and battery component requirements to get the full credit. If a car is missing one, it loses half the credit. If it’s missing both, you get no credit.

There is also a cost ceiling. Vans, SUVs and pickup trucks must be under $80,000. Other vehicles must be less than $55,000 to be eligible.

Click or tap here to see which vehicles are eligible for the full and partial credit.