Electric Vehicle Point-Of-Sale and Tax Credits Guide

Even though they provide great savings down the road, electric vehicles (EVs) are considerably more expensive than their gas-powered counterparts, which may have put them beyond your reach. However, to promote environmental sustainability, the federal government made it easier for you to go electric by adding a point-of-sale option to the Clean Vehicle Tax Credit. Check out this helpful guide to learn more about the point-of-sale EV tax credit.

Understanding EV Point-Of-Sale Tax Credits

The point-of-sale option streamlines the EV purchasing process and delivers immediate savings at the time of sale. Below is a guide to what the point-of-sale tax credit is, how it differs from traditional tax credits, and why these options are important for EV adoption.

What Is the EV Point-of-Sale Tax Credit?

Since January 1, 2024, You've had the option of transferring the Clean Vehicle Tax Credit to a qualified dealership so that they can be reimbursed at the point of sale when you buy an EV. This version of the EV tax credit allows you to save money on an EV at the time of purchase, reducing your upfront cost. Similar to the traditional Clean Vehicle Tax Credit, it can help you save up to $7,500 on a new EV or $4,000 on a used EV.

How Does the EV Point-Of-Sale Tax Credit Differ From Traditional Tax Credits?

Previously, you could only claim the Clean Vehicle Tax Credit on your tax returns. With the 2024 EV tax credit changes, you no longer have to wait until the next tax season to redeem your EV incentive. The point-of-sale tax credit works like an instant rebate, giving you an immediate discount on your desired EV. You may receive the credit as cash back or use it as a down payment for your car purchase.

Why Are These Credits Crucial for EV Adoption?

Both the traditional and point-of-sale EV tax credits play an important role in encouraging Americans to purchase EVs and help reduce carbon emissions. One of the main reasons EVs only make up a small percentage of the current automotive market is their high price tags. They're usually thousands of dollars more expensive than similar gas vehicles.

The Clean Vehicle Tax Credit is designed to offset the high costs of EVs, making them accessible to a wider range of consumers. With the point-of-sale EV credit, EV adoption is set to grow even faster as you can now get an upfront discount on your EV purchase.

Navigating the Application Process for EV Point-Of-Sale Tax Credits

Below, we discuss the steps you'll need to take to apply for your EV tax credit right at the point of sale.

Steps To Obtain the Point-Of-Sale Tax Credit for a New EV

To get the EV tax credit at the point of sale, you must purchase an EV with a dealership already registered with the IRS. Once you've decided which EV to buy, the IRS will perform an EV tax credit check to determine the eligibility of the model and the amount of credit it qualifies for. If your chosen EV model is eligible, the dealer will apply the credit to your purchase.

Eligibility Criteria for New EVs

According to the 2024 EV tax credit rules, your income must be below a certain threshold to obtain the point-of-sale EV credit. For example, if your modified adjusted gross income is above $150,000 (or $300,000 on your joint tax return), you're ineligible for the credit.

You must also pick an EV model that qualifies for the Clean Vehicle Tax Credit. For 2025, there are only 18 eligible EVs, including the Ford F-150 Lightning, Chevrolet Equinox EV, and Hyundai IONIQ 5. If you want a Tesla point-of-sale tax credit, you have a few models to choose from. Note that there are also price caps on different types of EVs. Electric SUVs and pickup trucks must have an MSRP below $80,000 to qualify for the EV credit, while other vehicles must cost less than $55,000.

Documentation and Dealer Registration Requirements

To get the EV tax credit applied at the point of sale, you must file the EV credit form with your tax return. If you no longer meet the eligibility requirements halfway through the year, the IRS may want you to pay the credit back as income tax.

To save time and hassle, it's best to purchase an EV from a dealership that has already registered with the IRS. The dealership will handle most of the paperwork and apply the discount directly to your EV purchase, making the process a breeze.

Claiming the Point-Of-Sale Tax Credit for a Used EV

The procedure for claiming used EV credit at the point of sale is basically the same as redeeming credit for a new vehicle. You must buy an EV from a dealer registered with the IRS and choose a qualifying model. However, verifying which used EVs are eligible for the credit can be complicated.

Pros and Cons of Getting the EV Tax Credit at the Point of Sale

There are benefits and potential drawbacks to redeeming your EV tax credit directly at the point of sale.

Advantages: Immediate Savings and Reduced Upfront Costs

By allowing you to claim the Clean Vehicle Tax Credit at the dealership, the point-of-sale EV credit provides instant savings and lowers your upfront costs. This makes it easier for you to own your dream EV. Moreover, you may also get more value from the point-of-sale credit than you would during tax season. Unlike the traditional nonrefundable EV credit, this version enables you to redeem the full amount of credit available at the point of sale. You don't need to pay back the difference even if your tax burden is less than the credit.

Potential Drawbacks: Limited to Certain Dealers or Models

Not every dealership has registered with the IRS, and only a handful of EV models qualify for the credit. So, you can expect fewer options if you opt for the point-of-sale EV credit.

Seek Expert Advice From Volvo Cars Mission Viejo

If you're planning to take advantage of the point-of-sale EV tax credit in Mission Viejo, California, get in touch with the friendly and knowledgeable team at Volvo Cars Mission Viejo. We can answer any questions you have about the point-of-sale credit and help you choose an eligible EV that's right for you. Contact us by phone, email, or live chat to learn more.