The new program introduced by the IRS will encourage people to buy electric vehicles as purchases of EVs will be incentivized.
Incentivizing the purchase of EVs will promote independence from fossil fuels as well as combat the effects of climate change. (Photo: The Week)
New Program By The IRS
The Internal Revenue Service (IRS) has introduced a new program with new rules for 2024 as part of the Biden administration’s efforts to modernize the U.S. economy.
The new program aims to incentivize the purchase of electric vehicles (EVs) to reduce dependence on fossil fuels and combat climate change.
Unlike traditional tax credits, in the new program, qualifying individuals may not have to wait until the next tax season to receive the rebate. However, stricter federal requirements for this new program would also mean that fewer cars will be eligible for the rebate.
Under this new program, the IRS will allow EV buyers to transfer the tax credit to certain dealerships in exchange for a discount on their vehicle, effectively providing the rebate at the time of purchase.
To qualify for the new program, individuals must meet income level thresholds based on their reported income from the previous year.
The new program also explains that if someone purchases an EV in 2024 and their income surpasses the threshold in the following year, they may need to repay the rebate in the 2025 tax season.
In line with the new program, the purchase must involve a qualified dealer registered with the IRS and a vehicle assembled in North America, among other strict requirements.
According to a published article by SmartNews, the amount of the rebate depends on the car’s components. The sticker price for eligible EVs must be under $55,000 for cars and $80,000 for SUVs, trucks, and vans.
Clean Vehicle Tax Credit
In a published article by NPR, the Biden administration aims to promote the adoption of electric vehicles and reduce carbon emissions but also wants to encourage companies to establish a domestic supply chain.
This can lead to confusion for car shoppers. However, starting in January 2024, buyers can receive the clean vehicle tax credit as an instant rebate when purchasing the vehicle, instead of waiting until tax season the following year.
The dealership will provide the credit upfront and later receive reimbursement from the IRS. Buyers still need to meet the income cap requirements and confirm that they are purchasing the vehicle for personal use in the United States.
The income caps for new vehicles are $300,000 for married couples filing jointly, $225,000 for heads of households, and $150,000 for all other filers.
It’s important to consider adjusted gross income (AGI), which takes deductions into account, rather than total income or taxable income.
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