As of January 1st, 2024, the Federal Clean Vehicle Credit can be passed along to a qualified dealer, allowing them to reimburse qualified buyers at the time the EV is sold.
This “instant rebate” version of the Clean Vehicle Credit can be a very useful feature for buyers and sellers, provided that you follow a few basic precautions.
First, let’s talk through the pros and cons of getting the credit at the point of sale instead of during tax season. Then, we’ll discuss how to get the credit at the point of sale for new or used EVs.
Disclaimer: this article is for informational purposes only and should not be considered tax, legal, financial, or accounting advice. We’re EV experts, not tax advisors, so be sure to consult with your own financial or legal advisors before making transactional decisions.
Pros and Cons of Getting the EV Tax Credit at the Point of Sale
Like anything else, there are advantages (and disadvantages) of the POS EV tax credit (vs. the traditional way of getting it at tax time). That said, let’s dive in and take a look at potential pros and cons!
What are the advantages of the POS EV Tax Credit?
A point-of-sale (POS) tax credit gives you the option to save money on your EV at the time of your actual purchase, effectively lowering your initial cost.
In some situations, you may receive the POS credit as a cash back incentive or agree to use the EV credit as part of a down payment on your EV (and remember, more money down means less interest in the long run). All of these scenarios make the purchase of an EV with the POS credit simpler and can reduce the worry you may have about waiting to take the credit until your next tax filing.
Getting the credit applied at the point of sale also currently means that you may be receiving more value from the POS credit than you would at tax time. While the Federal Clean Vehicle Credit is normally non-refundable (meaning you won’t get a check if your tax burden is worth less than the credit), the POS Credit allows dealers to give you the full amount of the available credit at the time of sale.
Even if your tax burden for the year isn’t enough to cover that amount, neither you nor the dealership will need to pay back the difference (unless you don’t actually qualify; see the FAQ below for more details).
For example, if you purchase a new EV for $45,000 that qualifies for the full $7,500 tax credit but you only owe $1,500 in taxes for the year, filing for the credit at tax time will only clear your $1,500 tax burden, leaving $6,000 of the credit that you won’t get to use. However, if you transfer the credit to the dealership as a POS credit, then you can receive the full $7,500 value off the purchase price of your vehicle.
Will the IRS continue to allow taxpayers to keep the excess amount of the credit? The answer isn’t entirely clear. However, as of April 2024, the guidance that the IRS currently gives states that the IRS is not pursuing “recapturing the excess.”
What are the disadvantages of the POS EV Tax Credit?
There are a few problems that can crop up as a result of the POS EV tax credit that we need to mention.
First, some dealerships or sellers may be less inclined to work with you on lowering the price of a vehicle thanks to the fact that you’ll already be getting a discount in the form of the POS EV tax credit. At best, this can simply mean that you may not get any negotiating room on a fairly-priced vehicle. At worst, the selling price of the vehicle may be artificially inflated by a less scrupulous salesman or dealer expecting the credit to attract buyers.
We strongly suggest that you research fair market prices before going to any dealership or seller so that you don’t get stuck with the latter situation.
Finally, authorized dealerships don’t need to verify whether or not you actually qualify for the credit. While they should be aware of which vehicles qualify, they do not legally have to verify your Modified Adjusted Gross Income (MAGI). However, the IRS does care whether or not you qualify, and they will take action to get that money back from you personally (and NOT the dealership that gave you the discount) if you don’t actually qualify.
How do I get the Point of Sale Tax Credit for a New EV?
In order to get your Federal EV Credit at the time of sale, the EV dealership you purchase from must first be registered with the IRS. This also applies to online sales by manufacturers such as Tesla, Rivian, and Lucid. Next, the vehicle that you are purchasing must meet IRS guidelines to qualify (see our discussion on the Federal Clean Vehicle Credit for a current list of qualifying vehicles).
It’s worth noting that some dealerships, even those that sell qualified EVs, have been slow to register with the IRS to provide the POS credit. You should check to make sure that the dealership you are considering purchasing an EV from has already registered before making a purchase if you intend to get the credit at the point of sale or as a part of your tax filing.
All paperwork for the POS EV credit (also called the time of sale EV credit) needs to be done at the time of the actual sale, not afterwards. If the dealership is registered, then they will handle the bulk of the paperwork and apply the amount directly to your purchase.
Note: just because a dealer offers you the POS credit, you do not have to accept it. This is especially important in the situation where you aren’t sure if you will qualify based on your MAGI.
How do I Get the 2024 EV Tax Credit at Point of Sale for a Used EV?
Again, in order to get a point of sale credit for a used EV, the dealership you buy from must be registered with the IRS. Additionally, you must verify that the EV qualifies, which can be a bit more complicated for used EVs than new. For more information which used EVs qualify for the credit, see our article covering the Previously Owned Clean Vehicle Credit.
Like transferring the credit to a dealer for new EVs, transferring your credit to receive a point of sale credit for a used EV requires the seller to fill out and submit the relevant paperwork for a credit transfer.
Can I Get the POS EV Tax Credit In a Private Sale?
While the IRS restricts the Used Clean Vehicle Tax Credit to dealership sales to keep track of how and when the credit is applied, you can still get the benefit of the POS EV tax credit in a private sale.
With our partner, KeySavvy, you may be eligible to privately buy (or sell) a used EV while taking advantage of the Federal EV tax credit at the point of sale.
KeySavvy acts as a licensed dealer to buy a used EV from the private seller and sells that EV directly to the buyer. Because KeySavvy is a dealership, they can receive the transferred Used Vehicle Credit for buyers and pass on that savings as a point of sale rebate, effectively lowering your purchasing cost. For sellers, this means that you may be able to advertise your EV as a qualified EV for the used credit (remember, vehicle restrictions apply: see our article covering the Previously Owned Clean Vehicle Credit for more details).
Here’s what the process looks like:
- The seller of the used EV registers their car with KeySavvy
- KeySavvy provides a shareable payment link to the seller
- Buyer payment is made through the payment link online and handled directly by KeySavvy with fraud prevention and payment protection.
- All of the paperwork and title transfer is handled by KeySavvy (including the relevant EV credit transfer documentation).
Find a Qualifying Used EV for the POS Tax Credit
With KeySavvy making it possible for private EV sales to benefit from the point of sale tax credit, we’d like to share an easy way for you to check through our used EV listings for EVs that qualify.
Here’s how that works:
- Go to All Listings
- Filter pricing for EVs under the Used EV Credit price cap: $0 to $25,000
- Select credit-eligible manufacturing years (at least 2 years prior to the current year; for 2024, that means up to the 2022 model year)
- Narrow down your search with your personal EV requirements (Make/Model, Number of Seats, Autopilot Software, and more)
- Copy the vehicle’s VIN over to KeySavvy’s convenient tax credit Eligibility Tool
We hope you found today’s guide helpful! Here are a few additional FAQs about the point of sale Tax Credit for EVs.
Federal EV Tax Credit POS FAQ
How Do I Know if a Dealership is Registered to Give the POS EV Tax Credit?
As far as we’ve been able to discover, there is no registry list that consumers can access to see if a given dealership is registered for the POS EV rebate or not.
At the time of writing, the best way to make sure that the credit transfer is being done correctly is to 1) make sure the dealership provides you with a copy of the time-of-sale report and 2) confirmation that they have successfully submitted this report to the IRS through the IRS Energy Credits online portal. The IRS does process these reports in real time, so we would highly recommend that you wait for the dealership to submit the report before the sale is finalized (and certainty before driving off the lot, if possible).
Are Used EVs Eligible for a Point of Sale Credit?
Yes! The point of sale tax EV credit is available for both new and used EVs that meet the qualification criteria. See our article covering the Previously Owned Clean Vehicle Credit for more details about which used EVs qualify for the credit.
And while EVs must be sold through a qualified dealership for the credit to be applied at the time of sale, there is a way to get the POS tax credit in a private sale by using our partner, KeySavvy, to facilitate the sale.
Who Is Responsible for the POS EV Tax Credit Paperwork?
The seller (a qualified dealership) is responsible for the bulk of the paperwork for the point of sale tax credit. They must be registered with the IRS and file for a transfer of the credit in order to provide the buyer with the time of sale credit value.
The buyer will still need to record the receipt of the credit on their taxes for the year that the vehicle is put into service (Form 8936).
If I Receive but Don’t Qualify for the POS EV Tax Credit, Who Pays Back the Credit Money?
If you receive the credit at the point of sale but do not qualify according to your income or for some other reason, you will need to pay the full amount of the credit you received back to the IRS.
Dealerships do not need to fully verify a buyer’s income in order to file for the time of sale EV tax credit, so it is up to the buyer to verify their own Modified Adjusted Gross Income (MAGI) before the sale.
Can I Sell an EV with the Point of Sale EV Tax Credit?
As a private seller, you are not qualified to offer the POS tax credit on your own. However, our partner KeySavvy can act as a qualified dealership on your behalf and offer the POS credit to the buyer during your transaction.