The federal tax credit for people buying or leasing electric vehicles is set to end after September 30th. But, it seems there might be a bit of breathing room until then. A recent document from the IRS clarifies some things about this.
In July, tax credits of up to $7,500 were eliminated as part of Republican tax reforms. The law specifies that if an EV is “acquired” after September 30th, the consumer won’t be eligible for the tax credit.
Initially, some thought that meant consumers needed to physically have their vehicles by that date. However, the IRS cleared up the confusion on that front.
If a taxpayer has a “written binding agreement” and begins making payments on an EV before the deadline, they can still claim the federal tax credit once they take full ownership of the vehicle. According to Ingrid Malmgren, senior policy director at Plug in America, a nonprofit focusing on accelerating the shift to electric vehicles, this means there’s still a chance to drive off in that dream electric car even if you can’t do so by September 30th.
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IRS guidelines affect both new and used electric vehicles, as well as leased ones. They pertain to sections 25E, 30D, and 45W of the tax law. Malmgren mentioned that you can order a car from a dealer or manufacturer, sign a contract, and make a deposit by September 30th, then take ownership later. Making payments could even involve trading in another vehicle.
Of course, both the car and the buyer have to meet certain requirements to qualify for the federal tax credit.
Consumers can opt for an immediate rebate when they own the vehicle, which means they won’t have to wait until tax season to see those savings. This faster process has its perks, as buyers won’t need to be tax-liable to receive the credit. The IRS also notes that taxpayers should get a sales report from the dealer when they pick up their EV, or within three days of doing so.
