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Over Half a Billion in EV Tax Rebates Issued by US Treasury to Dealers in 2024

The Inflation Reduction Act enables buyers to receive a $7,500 tax credit for new electric vehicles as an immediate discount, with about 90% of eligible consumers choosing this advance payment option.

April 15, 2024

According to recent data from the Treasury Department, the majority of Americans purchasing eligible new electric vehicles are choosing to receive their associated tax credit directly from car dealers at the point of sale, rather than waiting to claim it during tax season.

Approximately 90% of consumers eligible for the "new clean vehicle" tax credit, which can be as much as $7,500, are opting for the credit to be applied upfront. This upfront credit option, introduced by the Inflation Reduction Act signed by President Joe Biden in 2022, allows dealers to offer an immediate discount on electric vehicles. This discount can take the form of a partial payment, a down payment, or even cash back. The dealer is then reimbursed by the IRS.

Eletric Vehicles Charging
Credit: Ford Motor Company

Before 2024, U.S. auto buyers could only claim the new electric vehicle (EV) credit of up to $7,500, or the $4,000 used EV credit, when filing their tax returns the following year. However, starting in 2024, the Internal Revenue Service has processed about 100,000 time-of-sale EV credit reports, distributing over $580 million in advance payments to dealers since January 1, according to the Treasury Department.

The Treasury revealed that more than 85,000 of these reports were for new EVs, with over 90% of these purchasers requesting the maximum advance payment of $7,500. Additionally, there were more than 15,000 time-of-sale reports for used EVs, with approximately 75% of these buyers requesting advance payments of $4,000.

Haris Talwar, a spokesperson for the Treasury, noted, "Demand is high four months into the implementation of this new provision."

To qualify for the electric vehicle (EV) tax credit at the time of purchase, consumers must confirm that they meet specific income limits; otherwise, they will be required to repay the credit when they file their taxes. For new vehicles, the income cap is set at $300,000 for married couples filing jointly and $150,000 for individual filers. For more details on the Clean Vehicle Credits, check the IRS frequently asked questions documentation.

The Inflation Reduction Act, enacted in August 2022, revised the EV tax credit rules. Now, to qualify for any tax credits, vehicles must be assembled in North America. This change disqualified nearly 70% of the models that were previously eligible.

The number of dealers registered with the IRS Energy Credits Online portal to facilitate these financial transfers has grown to more than 13,000, an increase from just over 11,000 in early February. To register, dealers can access the IRS Portal.

As of April 15, according to data from the U.S. Energy Department, there are 34 new EV models eligible for tax breaks in 2024, The manufacturers of these models include Tesla, Ford, Chevrolet, Volkswagen, Honda, Nissan, Audi, Rivian, Jeep, Chrysler, Cadillac, Lincoln, and Acura.

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