The Internal Revenue Service has unveiled a portal that will allow prospective electric vehicle buyers to access EV tax credits at the point of sale. Car dealers can now dole out EV tax credits of up to $7,500 when customers on-site buy electric cars by registering with a website called Energy Credits Online.
This could potentially alleviate an issue that has kept many drivers from purchasing EVs even when they have access to federal tax credits. Rather than providing EV buyers with cash at the point of sale, the U.S. government would provide tax credits once tax season rolled around, meaning customers had to buy electric cars at full price and wait for up to several months to receive their tax credit.
While this wasn’t an issue for customers with disposable income who could afford to pay full price and wait for their tax incentive, it essentially locked out many buyers who were on tighter budgets and simply couldn’t afford to wait. The recent move by the IRS will ensure that prospective EV buyers can access tax credits immediately and make electric cars more accessible to American drivers.
Starting January 2024, customers will have immediate access to EV tax credits at car dealerships that are registered with Energy Credits Online. The website will allow car sellers to generate a “Time of Sale” for buyers to file alongside their federal tax returns. According to the IRS, car dealerships will receive advance payment within 72 hours of completing the online process.
IRS Commissioner Danny Werfel said the special online tool was designed to help electric vehicle dealers and sellers navigate the clean vehicle credit while helping American taxpayers properly file their taxes. It is part of the Biden administration’s efforts to cut carbon emissions from transportation by electrifying the nation’s entire fleet of cars.
The administration is pushing for 50% of new vehicle sales to be electric by the end of the decade, and it has invested billions of dollars into electrification via the Inflation Reduction Act. However, high prices are still a major barrier to electric vehicle adoption in the country, especially with inflation and rising living costs forcing many Americans to tighten their wallets.
While tax credits make electric vehicles more affordable, only making them accessible via tax refunds largely limited EV ownership to wealthier Americans. Ensuring that prospective buyers have immediate access to EV tax credits has the potential to boost EV purchases among drivers who would have been held back by the costs. The IRS has advised electric vehicle dealers to sign up for the online tool as soon as possible.
This change to how quickly EV buyers can access the federal tax credit is likely to trigger an uptick in the interest motorists show in various brands, including Lucid Motors (NASDAQ: LCID).
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