In a significant move to promote the adoption of electric vehicles (EVs), the IRS has released new guidance allowing car dealers to offer instant rebates to buyers of specific electric vehicles starting in January 2024. This memo outlines that eligible vehicles may qualify for tax credits of up to $7,500. However, the actual credit amount will be subject to various requirements, including the EV’s specifications and the buyer’s circumstances.
To qualify for the electric car tax credit, the vehicle must have a minimum battery capacity of seven kilowatt hours. Additionally, buyers cannot claim the credit if their adjusted gross income exceeds certain thresholds, which are $300,000 for married couples filing jointly and $150,000 for most single taxpayers. Furthermore, the manufacturer’s suggested retail price (MSRP) of the EV must not exceed specific price limits. For SUVs and pickup trucks, the cap is set at $80,000, while standard electric vehicles must have an MSRP of no more than $55,000. This provision ensures that the rebate primarily benefits buyers of more affordable EVs.
