Drivers in America are only a few months away from gaining instant access to electric vehicle tax relief instead of waiting months for tax season to arrive. Like several other governments, the U.S. government has invested billions of dollars into developing electric vehicle infrastructure in the country and accelerating EV adoption.
However, U.S. drivers interested in buying an electric vehicle must first buy the EV at full price and then wait for their tax refund to arrive during tax season. While such credits have undoubtedly spurred electric adoption, they favor drivers who have enough disposable income to buy costly EVs at full price and wait for months before the EV tax credit kicks in and part of their purchase is refunded.
Beginning January 2024, electric vehicle buyers in the United States will have immediate access to up to $7,500 in tax credits regardless of their tax bill’s size, allowing them to have cash on hand the day they make an electric vehicle purchase. Offering EV incentives to customers in this manner has the potential to significantly increase EV adoption in the nation because the incentives can reduce the cost of EV ownership from the moment of purchase.
Aside from the expedited access to EV credits, all other qualifying conditions for tax credits will remain the same. As such, not all electric models will qualify for the credits based on how their raw materials were sourced and how much the vehicles cost. To qualify for the credit, customers will have to show that they will use the electric car for personal use, are under the income limit and do not depend on another party’s taxes. Additionally, customers do not need to owe a specific amount of taxes to qualify for the credits.
Car dealerships will have to register with the Internal Revenue Service (IRS) and will be responsible for determining which EVs are eligible via vehicle identification numbers. Once the dealerships have confirmed that a specific EV qualifies for the tax credit, customers can transfer their credit to the dealership in exchange for a vehicle cash down payment. Car dealerships can expect to be reimbursed within 72 hours after submitting the purchase paperwork to the IRS.
Requiring that dealers confirm whether or not electric cars qualify for the federal credit saves customers from going through complicated and evolving rules to figure out which EVs are eligible and makes the overall EV purchasing experience much easier and faster.
Giving motorists instant access to the federal tax credits could spur greater interest in electric vehicles from various carmakers such as Fisker Inc. (NYSE: FSR) because buyers may regard the EVs as more affordable.
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