[1/3]Hummer electric vehicles are seen on the assembly line as U.S. President Joe Biden tours General Motors’ “Factory ZERO” electric vehicle assembly plant in Detroit, Michigan, the United States, on November 17, 2021. Portal/Jonathan Ernst/File Photo acquire license rights
WASHINGTON, Oct 6 (Portal) – The U.S. Treasury Department issued new guidance on Friday on how a $7,500 electric vehicle tax credit can be used as a point-of-sale rebate starting in January.
Currently, consumers can only claim the $7,500 new electric vehicle credit or the $4,000 used electric vehicle credit if they file their tax return the following year.
Starting Jan. 1, consumers will be able to transfer the credits to a car dealer, effectively lowering the purchase price of the vehicle, a change that may help boost sales of electric vehicles.
Under guidance issued Friday, consumers must certify that they meet income limits to be eligible for the tax credit or they will have to pay back to the state when filing their taxes.
For new vehicles, the adjusted gross income limit is $300,000 for married couples and $150,000 for individuals.
Congress approved comprehensive electric vehicle tax credit reform in August 2022 as part of the $430 billion Inflation Reduction Act (IRA).
The Ministry of Finance is also publishing further details on the registration requirements and transfer mechanisms for car dealers.
Merchants must register through a new IRS website to offer the credits. Starting in January, dealers can file vehicle sales with the IRS and receive payment for tax credits within 72 hours.
Under proposed regulations released Friday, remittances and prepayments typically would not affect merchants’ tax liability, and merchant payments would not be part of a consumer’s gross income.
The 2022 IRA law required vehicles to be assembled in North America to be eligible for tax credits, eliminating nearly 70% of eligible models at the time. On January 1, new price caps for qualifying electric vehicles and income limits for buyers went into effect.
In April, the Treasury Department introduced new rules specifying the procurement of battery components and critical minerals for qualification.
The Biden administration has yet to issue rules later this year detailing what is a “foreign entity of concern” that would later exclude electric vehicles from the credit if they have battery components or if batteries contain critical minerals from a foreign one Contains a company that raises concerns.
The Environmental Protection Agency has proposed rules that it predicts will result in 67% of new vehicles being electric by 2032.
Reporting by David Shepardson, Editing by Nick Zieminski
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