The U.S. gov implemented some changes to the EV tax credit on the first of the month, and the revamped system may impact how you sell electric vehicles and interact with your customers.
Here's a rundown of what's new, and what it all means:
⏎ Instant Rebate — First up, the tax credit isn't a next-year tax season thing anymore. It's now an instant rebate at the point of sale. This is a game-changer for customer interactions. You'll need to handle some paperwork, but it means immediate discounts for buyers, making EVs more attractive right off the bat.
🧢 Income Cap — Buyers will still need to fit certain income criteria to snag the credit — $300K for married couples filing jointly, $225K for heads of households, or $150K for other filers. Get ready to help customers understand if they qualify.
🎭 The Good and the Bad — The credit is no longer tied to the buyer’s tax liability, so they get the full credit regardless. However, the list of eligible vehicles also got a whole lot shorter.
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🔋 Vehicle Eligibility — A car’s eligibility for the EV tax credit now hinges on two key factors: its assembly location and price. To qualify, vehicles must be assembled in North America. There are also price ceilings — $55,000 for cars and $80,000 for SUVs and trucks. It will be important for dealers to stay updated on which models meet these criteria.
🗣️ OEMs Respond — Some automakers are adjusting their supply chains to re-qualify for the new clean vehicle credit, while others like GM will offer their own EV incentives in response to losing eligibility.
🔄 Used EV Market — A separate tax credit is available for used EVs, with a cap of $4,000 on vehicles costing less than $25,000.
🤝 Credit Transfer — Buyers can choose to transfer their new or used clean vehicle credit to a registered dealer in exchange for an equivalent reduction in the purchase price of the vehicle. Dealers must in turn provide the buyer with certain required information and submit a “time of sale report” containing buyer and vehicle information to the IRS.