DETROIT (AP) — Starting next year, people who want to buy a new or used electric or plug-in hybrid vehicle will be able to receive U.S. government income tax credits at the time of purchase.
Eligible buyers, including those who purchased an electric vehicle or hybrid this year, 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 a qualified new vehicle and $4,000 for a qualified used vehicle should reduce purchasing costs for consumers and help auto dealers by increasing sales of electric vehicles.
Pursuant to the Inflation Reduction Act, which included the credits, buyers can transfer the credits to merchants who can redeem them at the point of sale beginning Jan. 1.
Additionally, the government says people can get the full credit from merchants regardless of how much they owe in federal taxes.
The vehicles must comply with the legally established guidelines and the income of the buyers must be below the limits.
Merchants must have state or local licenses to offer the credits and they must register with an Internal Revenue Service website. After dealers submit sales documents, they can expect to receive payments from the government in about 72 hours, officials said.
To be eligible, electric vehicles or plug-ins must be manufactured in North America. For SUVs, vans and trucks, the sticker cannot be more than $80,000, while for cars the sticker cannot be more than $55,000.
Used electric vehicles must have a retail price of no more than $25,000.
There are also income limits for buyers, designed to prevent wealthier people from getting the loans. Buyers must not have an adjusted gross annual income of more than $150,000 if filing single, $300,000 if filing jointly, and $225,000 if filing 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 have claimed the credits, they will have to repay them when they file their income tax return, the government said.
In addition, there are battery and component manufacturing requirements that could result in some vehicles being ineligible or only eligible for a portion of the tax credits.
The Treasury Department’s guidelines must still go through the state 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 the market share of electric vehicles slightly to 7.5%. US consumers purchased 875,798 electric vehicles from January to September.