From next year, people who want to buy a new or used electric vehicle or plug-in hybrid will be able to get income tax credits from the US government at the time of purchase.
Eligible buyers, including those who bought an EV or hybrid this year, have had to wait until they filed their federal income tax returns to actually receive the benefits.
The Treasury Department says the near-instant credits of $7,500 for an eligible new vehicle and $4,000 for a qualifying used vehicle should lower purchase costs for consumers and help auto dealers by boosting EV sales.
Under the Inflation Reduction Act, which includes the credits, buyers can transfer the credits to dealers, who can apply them at the point of sale from 1 January.
In addition, the government says people can get the full credits from dealers regardless of how much they owe in federal taxes.
Vehicles must qualify under guidelines set out in the law, and buyers’ incomes must fall below limits.
Dealers must have a state or local licence to offer the credits, and they must register on an Internal Revenue Service website. After dealers submit sales paperwork, they can expect to receive payments from the government within about 72 hours, officials said.
To be eligible, electric or plug-in vehicles must be manufactured in North America. SUVs, vans and trucks can’t have a sticker price of more than $80,000, while cars can’t have a sticker price of more than $55,000.
Used electric vehicles can’t have a sticker price of more than $25,000.
There are also income limits for buyers, set to prevent wealthier people from getting the credits. Buyers cannot have an adjusted gross annual income of more than $150,000 if single, $300,000 if filing jointly and $225,000 if head of household.
To qualify, buyers must be below the income limits in either the year of purchase or the previous year. If their income exceeds the limits in both years and they’ve taken the credits, they’ll have to repay them when they file their income tax returns, the government said.
There are also battery and component manufacturing requirements that could disqualify some vehicles or make them eligible for only a portion of the tax credits.
The Treasury guidelines still have to go through the government’s regulatory process, including a public comment period.
Sales of new electric vehicles rose 50.9% in the first nine months of the year compared to the same period last year, increasing EV market share slightly to 7.5%. US consumers bought 875,798 EVs from January to September.
