Maximize Your Savings: Understanding Electric Vehicle Tax Credits and Direct Dealer Discounts

The electric vehicle (EV) tax credit has been enhanced, allowing individuals to receive the credit as cash at the dealership when purchasing an electric or fuel-cell vehicle. Previously, taxpayers had to wait until tax time to claim the credit, which was nonrefundable and could result in a partial or no credit depending on the amount of taxes owed. The EV tax credit applies to both new and previously owned vehicles, with different credit amounts and income thresholds. To claim the credit, taxpayers need to fill out IRS Form 8936 when filing their tax return. Starting in January 2024, individuals can receive the EV tax credit up front as a cash payment or down payment when purchasing an electric vehicle, regardless of their tax liability.