Starting Jan. 1, it will be easier and cheaper to buy a new or used EV

Beginning Jan. 1, 2024, the New Clean Vehicle Tax Credit (30D) and Used Clean Vehicle Tax Credit (25E) will be available at the time of sale from your local dealer because the tax credit can be transferred to the dealer. 

What does this mean? It means that when you purchase an eligible electric vehicle (EV) or Plug-In Hybrid Electric Vehicle (PHEV) and if you meet the income requirements, you get the FULL amount of the tax credit up front. So depending on the vehicle, you could get $3,750, $4,000 or $7,500 off of the purchase price. This money can even be used as a down payment on the vehicle. 

This is great news, especially if you aren’t flush with cash and want to experience the benefits of driving electric (lower fuel costs, less maintenance, and fewer repairs) and don’t have a lot of cash up front. One of the best things about this is that since the tax credit will be transferred to the dealer, you don’t need to have tax liability. This is incredibly important because historically, many tax credits haven’t been accessible to lower-wealth individuals and households because they have lower tax liability.

Here are some other important things to know:

• You are STILL responsible for making sure that you meet the income limits. 
  

• If you don’t pay much in taxes, no problem. You can still get the full amount of the tax credit if you transfer your tax credit to the dealer.
• You still have to file your tax return, and file Form 8936 and include the Vehicle Identification Number (VIN) on the form. The dealer will give you the necessary paperwork at the time of sale. 
• You have to buy the vehicle from a qualified dealer. The IRS is putting together a process for dealers to become qualified and will have that process in place by the time this guidance takes effect (Jan. 1, 2024).
• You do not need to transfer your tax credit to the dealer. If you really want to wait 10 months for that tax credit to redeem it on your taxes, knock yourself out. 
• Each taxpayer can transfer two tax credits per year. This can be two new clean vehicle tax credits, OR one new clean vehicle tax credit and one used clean vehicle tax credit. In the case of those filing joint returns, each person may transfer two tax credits per year as described in the last sentence. So, a household filing jointly can transfer up to four clean vehicle tax credits each year. That’s a lot of EVs!

For more details, please refer to our 2024 Federal Tax Credit page.