Dive Brief:
- Starting Jan. 1, 2024, car shoppers can transfer their new clean vehicle credit — up to $7,500 — or their previously owned clean vehicle tax credit — up to $4,000 — to a car dealer, the U.S. Department of the Treasury and Internal Revenue Service said Friday.
- Only clean vehicles, such as electric vehicles, will be eligible. Car shoppers can transfer the full value of the credit to a dealer, no matter their individual tax liability.
- The policy aims to increase clean vehicle sales by lowering a vehicle’s purchase price at the point of sale. Currently, consumers must wait until they file their taxes to claim the credits.
Dive Insight:
Under the Inflation Reduction Act, Congress provided $12.5 billion in tax credits to boost clean vehicle sales. But stakeholders worried that complex rules surrounding the tax credits would make it too difficult for car shoppers to take advantage of the program and discourage the automotive industry from investing in EVs and other clean vehicles.
The Biden administration hopes the new guidance will boost EV sales by making it easier for consumers to use their clean vehicle credits.
“For the first time, the Inflation Reduction Act allows consumers to reduce the up-front cost of a clean vehicle, expanding consumer choices and helping car dealers expand their businesses,” Chief Implementation Officer for the Inflation Reduction Act Laurel Blatchford said in a statement. “The IRS has focused on streamlining this process for car dealers as part of its commitment to improving service and helping taxpayers claim the credits they are eligible for.”
Dealers will need to register with the IRS to offer clean vehicle credits for eligible electrified vehicles. The registration website — IRS Energy Credits Online — will be available later this month. Beginning in January, registered dealers will get paid for transferred credits after submitting clean vehicle sales information.
Friday’s guidance provides dealers with more information about registration and how the credit transfer will work in practice.
