New 2024 Changes to Electric Vehicle Credit

Starting in 2024, the buyer may give the electric vehicle credit to the dealership to receive an upfront purchase reduction instead of waiting to claim it on a tax return.  Essentially the dealer will receive the tax credit and would provide a discount or rebate to the vehicle’s purchase price in the amount of the tax credit. This would help taxpayers earn the credit before filing their tax return next year.

Taxpayers were hoping this advance discount (or rebate) would be one way to avoid the gross income limitation imposed on the vehicle’s purchaser (as how would the dealer know your income?). Revenue Procedure 2023-23 shuts down this belief as taxpayers must adhere to the AGI limitation.

You must certify you expect your income for the year is under the threshold and certify that if your income is over the threshold, the credit must be repaid with your tax return.

For new vehicles, your modified adjusted gross income (AGI) may not exceed:

$300,000 for married couples filing jointly

$225,000 for heads of households

$150,000 for single or married filing separately