$1 billion in EV tax credits issued upfront to buyers, say Treasury, IRS

on Jun12
by | Comments Off on $1 billion in EV tax credits issued upfront to buyers, say Treasury, IRS |

Halfpoint Images | Moment | Getty Images

The federal government has issued more than $1 billion in tax credits as an upfront cash incentive to buyers of electric vehicles, the U.S. Treasury Department and Internal Revenue Service said Wednesday.

The Inflation Reduction Act created a mechanism whereby tax credits for buyers of new and used EVs — worth up to $7,500 and $4,000, respectively — could be delivered by car dealers at the point of sale.

The provision kicked in on Jan. 1.

Previously, consumers had to wait until filing their annual tax return, perhaps months or more than a year after their vehicle purchase, to get the federal credit. Americans can now also get the EV tax credit upfront regardless of their federal tax liability, which wasn’t the case prior to 2024.

“This has never been done before,” Deputy Treasury Secretary Wally Adeyemo said during a press call.

More from Personal Finance:
The tax deadline for American expats is June 17
Biden and Trump both want to extend tax cuts for most Americans
Home equity is near a record high. Tapping it may be tricky

He called the $1 billion threshold a “major milestone” that was hit faster than expected.

“A lot of people would like to see the savings right now instead of waiting to file their taxes next year,” Adeyemo said.

Trying to help EVs compete on price

However, not all new EV models are currently available for a federal tax credit, as automakers aim to meet certain manufacturing standards in the Inflation Reduction Act. The law requires certain parts of the car be manufactured in North America to qualify for a full or partial EV credit.

The U.S. Energy Department maintains an updated list of automakers and models that qualify for an EV credit.

There are limitations on EV tax credit availability

“The electric vehicle tax credit benefits the wealthiest of Americans and costs hardworking American taxpayers billions of dollars,” Sen. John Barrasso, R.-Wyo., said in a written statement about the EV bill, which he co-sponsored.

Adeyemo, when asked about such criticism of the EV tax credit, pointed to the tax break’s limits on income and on households’ expected lifetime financial savings to suggest it doesn’t benefit the wealthiest households.

For example, single and married taxpayers are ineligible for a tax break for new EVs if their annual income exceeds $150,000 and $300,000, respectively. Those income limits are lower for used EVs: $75,000 and $150,000, respectively.

There are also limitations based on EV sticker price. For example, SUVs and smaller cars qualify only if their sticker prices are below $80,000 and $55,000, respectively.

Previous postLAPD says no evidence former Chief ordered probe of LA Mayor – NBC Los Angeles Next postApple Vision Pro to debut in China, Japan and Singapore this month

Los Angeles Financial times

Copyright © 2024 Los Angeles Financial times

Updates via RSS
or Email