WASHINGTON (Reuters) – The U.S. Treasury Department has released new guidance regarding the use of the $7,500 electric vehicle (EV) tax credit as a point-of-sale rebate starting in January. Currently, consumers can only take advantage of the credit when they file their tax returns the following year. However, starting from January 1st, they will be able to transfer the credits to a car dealer, effectively lowering the purchase price of the vehicle. This change is expected to boost EV sales.
According to the guidance issued on Friday, consumers will have to confirm that they meet the income limits to qualify for the tax credit. If they don’t meet the requirements, they will need to repay the government when filing their taxes. For new vehicles, the adjusted gross income limit is $300,000 for married couples and $150,000 for individuals.
This reform of the EV tax credits was approved by Congress in August 2022 as part of the $430 billion Inflation Reduction Act (IRA). As part of the new guidance, the Treasury Department is also providing more details on registration requirements and the transfer process for car dealers.
In order to offer the credits, dealers will need to register through a new IRS website. Once registered, dealers will be able to submit vehicle sales to the IRS and receive payment for tax credits within 72 hours. Proposed rules released on Friday state that credit transfers and advance payments will generally not affect dealers’ tax liability, and dealer payments will not be considered part of a consumer’s gross income.
In addition to these changes, the 2022 IRA law also requires vehicles to be assembled in North America to qualify for any tax credits, which eliminated nearly 70% of eligible models at the time. New price caps on qualifying EVs and limits on buyers’ income also became effective on January 1st.
In April, the Treasury implemented new rules that require sourcing battery components and critical minerals to qualify for the credits. Furthermore, the Biden administration is expected to issue further rules later this year to define a “Foreign Entity of Concern,” which will disqualify EVs from receiving credits if they have any battery components or if their batteries contain critical minerals from such an entity.
The Environmental Protection Agency aims to have 67% of new vehicles being EVs by 2032 through proposed rules that it has forecasted.
(Reporting by David Shepardson; Editing by Nick Zieminski)
Credit: The Star : Tech Feed
