The U.S. Treasury Department on Friday issued new guidance on how a $7,500 electric vehicle tax credit can be used as a point-of-sale rebate starting in January. Currently, consumers can only take advantage of the $7,500 new EV credit or $4,000 used EV credit when they file their tax returns the following year. Starting Jan. 1, consumers can transfer the credits to a car dealer, effectively lowering the vehicle’s purchase price, a change that may help boost EV sales.
Congress approved a sweeping reform of the EV tax credits in August 2022 as part of the $430 billion Inflation Reduction Act . Treasury is also releasing more details on registration requirements and the mechanics of the transfer for car dealers. Dealers will need to register via a new IRS website to offer the credits. Beginning in January, dealers can submit vehicle sales to the IRS and receive payment for tax credits within 72 hours.
In April, Treasury implemented new rules setting sourcing battery components and critical minerals to qualify. The Biden administration must still issue rules later this year detailing what constitutes a 'Foreign Entity of Concern' that will later disqualify EVs for credits if they have any battery components or if batteries contain critical minerals from a foreign entity of concern.