Media Reports, page-2355

The IRS released new guidance on the EV tax credit today, and the changes mean that starting next year, low- and middle-income buyers will be able to get the full $7,500 credit even if they don’t have enough tax liability.

The Inflation Reduction Act included big changes to the EV tax credit, and those changes were set to roll out over the course of the months and years after it passed.

One of those changes has to do with making the tax credit available upfront at the point of sale. This means that, instead of having to file for the credit on your taxes the year after you purchase an EV, you just get a cheaper car upfront.

One other issue with the tax credit was that it wasn’t available to customers who didn’t have enough tax liability to claim it. The credit is not “refundable” and can’t be rolled forward, so if you don’t make more than about $66,000 (absent other credits), you won’t have enough tax liability to reduce and therefore you leave some of the $7,500 on the table.

But the new changes announced today fix that, such that buyers of lower income levels will be able to get the full $7,500 credit, upfront at the point of sale.

The relevant part of the law is the new “transferability” provision that allows a buyer to transfer the EV tax credit to the dealership they are purchasing the car from. The dealer then passes the savings on to the buyer, and is reimbursed by the government with an advance payment of the tax credit.

https://electrek.co/2023/10/06/ev-tax-credit-changes-mean-low-income-buyers-can-now-get-full-7500/