Sales associate Devani Knox (right) thanks Dana Nachman and her daughters Sidney, 7, Annie, 11, and … [+]
The Internal Revenue Service on Wednesday opened the portal for car sellers to register with Energy Credits Online – a site that will allow dealers to dole out the federal electric vehicle tax credit of up to $7,500 to buyers as a discount.
The move marks the latest step in making the federal electric vehicle tax credit immediate. Come January, eligible electric vehicle buyers will be able to receive the federal tax credit upfront at the dealership, provided the dealership is registered with Energy Credits Online.
With the tool, electric vehicle sellers will be able to generate a “Time of Sale” report that buyers will use when they file their federal tax returns. Sellers, for their part, will be able to complete the online process and receive advance payments within 72 hours, according to the IRS.
“This special online tool is designed to help dealers and sellers navigate this important new Clean Vehicle Credit and help taxpayers at tax time,” IRS Commissioner Danny Werfel said in a press release.
The point-of-sale incentive builds on policy outlined in the Inflation Reduction Act, a package of green incentives that Democrats passed and President Joe Biden signed into law in August 2022. The White House is pushing to have 50% of new vehicles be electric by 2030.
One of the challenges of electric vehicle adoption is affordability, as these cars, on average, cost more than their gas-powered counterparts. The average electric car costs $53,469, compared to $48,334 for gas powered autos, according to July data from Cox Automotive, parent of Kelley Blue Book.
The federal tax credit can help make the cars more affordable, as can a slew of state incentives, including sales tax exemptions, tax credits and rebates. A collection of states – including Colorado, Vermont and New Jersey – offer such incentives. In Colorado, for example, an electric car buyer could get a $5,000 state tax credit. On the other hand, some states charge electric vehicle owners hefty fees.
The IRS says the tool is designed for businesses of all sizes, but could be particularly helpful to small businesses that sell electric vehicles. It advised EV sellers to begin the enrollment process immediately.
Last month, Mike Stanton, president and CEO of the National Automobile Dealer Association, said the point-of-sale federal tax credit “should allay the biggest dealer concerns with their role in facilitating advanced clean vehicle tax credits to consumers at the point of sale starting in January 2024.”
