The revamped $7,500 tax credit was touted as a major victory in the Biden administration’s Inflation Reduction Act. It did boost EV sales, with momentum carrying through into the first quarter of this year.
However, there’s a significant flaw in how the credit was implemented. If you purchased an EV last year, it’s crucial to understand the issue, as it could end up costing you the full $7,500.
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How Dealers’ Delays Could Cost You Your EV Tax Credit
When you bought or leased an EV, your dealer was supposed to use a new portal to register the car with the IRS. But the system had a 72-hour window for each sale, and if the dealer was delayed—or unaware they needed to report within that time—the portal would lock, and your car wouldn’t count toward the tax credit. Oops.
It’s almost too funny to believe true, but this is the position many buyers have found themselves in—stuck in the middle of the red tape between buying an EV and the federal government. The new system for claiming tax credits clearly isn’t fit for purpose.
Hold Tight, There’s a Fix
To clarify, this wasn’t your fault. The dealer was responsible, so you didn’t miss anything or fail to do something.
After hearing complaints from enough dealers, the National Automobile Dealers Association lobbied the IRS, which has now implemented a fix. Dealers can now log back in and register cars that were missed earlier.
You might be wondering how to tell if your car wasn’t properly registered. There are two possible ways to find out.
First, the IRS or your tax preparer should have notified you if you’ve already filed your taxes and the car was rejected. Second, if the dealer applied the $7,500 credit to your purchase price upfront, the issue is with them, not you. You received the discount, and now they’re left handling the paperwork.
How-To Geek’s Take
If you’ve filed for a tax extension and planned to claim the credit later, contact your dealer immediately. You need to ensure they’re aware the portal is back open and can register your car in the system.
According to USA Today, only seven percent of buyers delayed the credit, while most took the discount upfront. Be cautious, though—trying to claim the credit again is illegal.
If you leased an EV, the credit should have been applied as a discounted monthly lease payment, not a direct tax credit, which only the dealer can claim. Don’t attempt to make the claim yourself after the fact.
Lastly, keep in mind that you cannot claim the credit if your joint income exceeds certain thresholds. For married couples, that’s over $300,000 in 2024; $225,000 for heads of households; and $150,000 for other filers.
Source: USA Today
