Big news on the EV tax credit front: 8,700 car dealers across the country have signed up with the U.S. government to provide incentives to car buyers at the point of sale, Treasury Department officials said on Friday.
That's a jump of 1,300 dealers over the last week, and it means it's getting easier and easier to get thousands of dollars off of the purchase of a qualifying new or used EV. Up until recently, the longstanding EV tax credit was just that: a credit EV buyers could apply for to reduce their federal tax liability. As of Jan. 1, the incentive is available as, basically, cash on the hood through a dealership.
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The EV Tax Credit Just Got A Whole Lot Better
For over a decade, EV buyers have had to wait until tax time to apply for an up-to-$7,500 incentive from the federal government. Now the Feds have authorized car dealers to provide the incentive as an up-front discount to shoppers, then get reimbursed.
If both you and your desired vehicle meet all the eligibility requirements for the credit program, you can get up to $7,500 lopped off of the purchase price of a new EV, or up to $4,000 off the price of a used one. The government then reimburses the dealership for providing that discount.
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This new process should go a long way toward making the tax credit more accessible, and toward making EVs more appealing to more people. An immediate discount is more appetizing than a refund down the road. Moreover, under the old way of doing things, buyers who owed less than $7,500 in federal taxes couldn't take full advantage of the credit.
Dealerships are already handing out government-funded discounts to car shoppers. The IRS has received and acknowledged hundreds of payment requests from dealers, and it plans to start doling out payments imminently, Treasury officials said.
While the EV tax credit has become easier to obtain in 2024, many fewer vehicles qualify than last year. New restrictions on battery sourcing that went into effect this year booted several cars off the list, including the Ford Mustang Mach-E and some Tesla Model 3 sedans. But many of the most popular models out there—like the Tesla Model Y and Chevrolet Bolt—still qualify.