'Instant' EV Tax Credits Are a Hit: $1 Billion Paid This Year
Claiming federal electric vehicle tax credits at the point of sale is a new and popular option in 2024.
Most eligible buyers of qualifying electric vehicles this year, are taking their federal EV tax credit at the point of sale. That’s according to recent data from the U.S. Treasury Department.
Since January 1, when the point of sale credit became available, about 90% of eligible buyers have claimed the credit on new electric vehicles at dealerships. As of April, about 80% of used EV buyers have opted for the $4,000 credit at the time of purchase.
Treasury says the federal government has reimbursed over $1 billion to the dealers who offered the tax credit so far this year.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
2024 EV tax credits
The federal electric vehicle (EV) tax credit is part of the Inflation Reduction Act (IRA), significant tax and climate legislation passed two years ago to promote clean energy. This credit provides up to $7,500 for certain types of electric vehicles, commonly known as "clean vehicles," to encourage more people to use EVs.
The amount of credit you can receive for your electric vehicle depends on various factors, like the vehicle's sourcing and assembly. To be eligible for the full credit, the vehicle must be predominantly sourced and assembled in North America. If you are considering a used, previously owned electric vehicle you may receive a tax credit of up to $4,000 or 30% of the sales price (whichever is less).
There has been ongoing uncertainty over which electric vehicles qualify for the tax credit due to several new EV rules that kicked in at the beginning of this year. About twenty electric vehicles are currently eligible for the federal credit. To see which vehicles qualify, visit the fueleconomy.gov website.
Electric vehicle point of sale rebate
Despite the uncertainty, as of Jan. 1, 2024, eligible consumers can take the federal EV tax credit of up to $7,500 as a discount at the point of sale when they purchase a qualifying vehicle. (Previously, eligible buyers could only claim the credit when they filed their federal income tax returns.)
The point-of-sale credit essentially operates like an instant rebate.
- If you transfer the 2024 EV tax credit to the dealer, they can reduce the price of the vehicle by the credit amount.
- That means you can benefit from the tax break at the time of purchase without waiting until it's time to file your tax return.
- The federal government then reimburses the dealer for the credit amount.
Note: To pass on electric vehicle tax credit savings to consumers at the point of sale, dealers must be registered with the federal government. (Treasury reports that more than 13,000 dealers have done so.)
EV tax credit 2024 Income limit
However, it is important to remember that MSRP price caps and income limits for EV tax credits still apply. Electric cars with a price tag exceeding $55,000 and SUVs over $80,000 are ineligible.
To claim a federal tax break on a qualifying electric vehicle, your modified adjusted gross income (MAGI) should not exceed $150,000 (for single filers), $225,000 (for head of household filers), or $300,000 (for married filing jointly). Buyers should meet this requirement at the time of purchase.
Related
Get Kiplinger Today newsletter — free
Profit and prosper with the best of Kiplinger's advice on investing, taxes, retirement, personal finance and much more. Delivered daily. Enter your email in the box and click Sign Me Up.
As the senior tax editor at Kiplinger.com, Kelley R. Taylor simplifies federal and state tax information, news, and developments to help empower readers. Kelley has over two decades of experience advising on and covering education, law, finance, and tax as a corporate attorney and business journalist.
-
Need More Money for Retirement? You May Have Already Saved It.
Over 29 million lost 401(k) accounts worth almost $1.65 trillion have been forgotten by their owners. Here are eight ways you can locate your account.
By Donna LeValley Published
-
Five Ways to Save for Retirement in 2025
If you did a poor job saving for retirement last year, don't despair. There are ways to build your nest egg in the new year.
By Donna Fuscaldo Published
-
California Fires: How to Recover Tax Records and Other Important Documents
Disaster Recovery Having your tax records and other vital documents is important for claiming casualty loss deductions that can help with recovery.
By Gabriella Cruz-Martínez Last updated
-
Child and Dependent Care Credit: How Much Is It?
CDCTC The non-refundable tax break can help working families afford quality care for their child or qualifying dependent.
By Gabriella Cruz-Martínez Last updated
-
Gov. Hochul Wants to Triple the New York Child Tax Credit
State Tax Millions of New York families could get a larger state child tax credit check over the next two years under a new proposal.
By Gabriella Cruz-Martínez Last updated
-
U.S. Consumers May Feel Pinch From Panama Canal Tariff Hike
Tax Policy The Panama Canal tariffs on crossing ships will add to looming price hikes for U.S. consumers as Trump threatens to take control of the historic waterway.
By Gabriella Cruz-Martínez Published
-
The American Opportunity Tax Credit (AOTC): How Much Is It Worth?
Tax Credits This tax break can help you offset $2,500 in qualifying expenses tied to your higher education. Here's what you need to know.
By Gabriella Cruz-Martínez Last updated
-
Does Your State Have a Child and Dependent Care Tax Credit?
Child and Dependent Care Tax Credit Over two dozen states, plus the District of Columbia offer tax credits or deductions for working families.
By Gabriella Cruz-Martínez Published
-
Should Rent Be Part of Your Retirement Plans?
Retirement Taxes Retiree renters may qualify for potential tax savings. Are you considering a move?
By Kate Schubel Last updated
-
On the Naughty List: Holiday Tax Scams to Look Out For
Tax Tips The IRS says scammers are on the prowl for your financial information. Know the signs so you don't fall victim.
By Kate Schubel Last updated