Question: Jessica will purchase a new electric vehicle (EV) in 2025. She knows the federal clean vehicle tax credit but prefers to apply it directly at the dealership rather than waiting to claim it on her tax return. Can she transfer the credit to the dealer at the point of sale?
Answer: Yes. Under the Inflation Reduction Act of 2022, effective for vehicles placed in service in 2024 and beyond, eligible taxpayers can transfer the clean vehicle credit to an eligible dealer registered with the IRS [§30D(g)]. This provision allows the credit to function as an immediate price reduction rather than waiting to claim it when Jessica files her tax return.
To qualify, the EV must meet the final assembly, battery component and critical mineral requirements outlined in §30D(d). Additionally, Jessica’s modified adjusted gross income (MAGI) for the current or preceding tax year must not exceed the applicable limit – $300,000 for married filing jointly, $225,000 for head of household, or $150,000 for single filers – or she must repay the amount received for transferring the credit when filing her tax return [§30D(f)(10)].
Any improper use of the credit by ineligible taxpayers may result in a recapture of the credit upon filing.
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Information included in this article is accurate as of the publish date. This post is not reflective of tax law changes or IRS guidance that may have occurred after the date of publishing.