Evolving Electric Vehicle Incentives: What to Expect in 2024
A Game-Changer for EV Buyers
In what's described as a significant shift in policy, the $7,500 tax credit for new electric vehicles (EVs) is getting a makeover in 2024.
It is set to become more immediately accessible, sidestepping the long wait until tax season that consumers face today. Car dealers will have the power to apply the credit at the point of sale, functioning like an instant rebate starting January 1st.
Immediate Benefits for Consumers
Prospective EV owners can look forward to an instant boon when this new system kicks in.
They'll have the option to transfer their federal tax credit to the dealer, effectively lowering the purchase price or improving the deal's terms upfront.
This change is expected to stimulate the EV market by making the economic advantages more tangible at the time of purchase for both new and used vehicles.
- New EV Credit: Up to $7,500
- Used EV Credit: Up to $4,000
Source: IRS
Expanding Eligibility Beyond Tax Liabilities
No longer bound by the confines of a nonrefundable credit, the tax break in 2024 breaks new ground. Ingrid Malmgren, policy director at Plug In America, highlights this in her discussion with CNBC Autos, noting that the credit now supports consumers independent of their federal tax burden.
This inclusiveness stands to broaden the appeal and benefit of EVs, propelling their integration even further into the mainstream market.
Manufacturing Criteria That Could Limit Choices
However, intertwined with the bright prospects are new manufacturing requirements borne from the Inflation Reduction Act.
Aiming to shore up domestic supply chains, these rules could paradoxically restrict the range of eligible EVs, casting a shadow on the affordability and selection of vehicles on the market.
Exclusions Due to Geopolitical Concerns
Stemming from a push to distance from certain foreign suppliers, the government underscores that EVs with core parts from "foreign entities of concern" won't qualify for the tax incentives.
Potential examples include China and Russia, nations that could impact the market's array of budget-friendly EV options.
For clarity, the U.S. Department of Energy has provided lists of eligible new and used EVs that meet the criteria.
What Buyers Should Watch Out For
Although these developments may generate excitement among EV enthusiasts, a note of caution is warranted. Not all dealers might participate in the credit transfer system. Plus, buyers are mandated to file a tax return for the year of the credit transfer and must meticulously comply with income and vehicle criteria. A slip in these requirements could demand a repayment, adding a layer of diligence for consumers.