Time is running out to claim the federal electric vehicle tax credit. The popular incentive expires on September 30. However, the IRS just gave car buyers valuable extra time. New guidance says a signed contract is now key to qualifying. This change helps buyers who may not receive their new car by the deadline.
New ‘Binding Contract’ Rule Gives Buyers Wiggle Room
Previously, buyers had to take delivery of their EV by the deadline. This created risk due to shipping or manufacturing delays. The new IRS rule changes this requirement. Buyers can still get the credit if they sign a binding purchase contract by Sept. 30. They must also make a down payment or deposit by that date.
This update is a major relief for many shoppers. “The added wiggle room” is especially helpful for custom orders. It also helps those buying a car from another state, says H&R Block’s Andy Phillips. The credit is still claimed after you get the vehicle. But eligibility is now locked in when you sign the contract.
How to Qualify Before the September 30 Cutoff
The credit provides up to $7,500 for new EVs. It offers up to $4,000 for used models. Since 2024, buyers can transfer the credit to the dealer. This lowers the car’s price at the point of sale. If you plan to buy, you must act quickly.
Get a Written Agreement and Make a Payment
Ask your dealer for a written purchase agreement. Ensure it is signed on or before Sept. 30. You must also make a down payment or provide a trade-in. Skipping this payment step could make you ineligible for the credit. Be sure to keep copies of your contract and payment receipt.
Check Vehicle and Income Requirements
The vehicle must be assembled in North America. It also must meet battery sourcing rules. Buyers must meet income limits. For new cars, your income must be $300,000 or less (joint filers). For single filers, the limit is $150,000. Price caps also apply. New SUVs and vans must cost under $80,000. Other cars must be under $55,000.
The Leasing Loophole: An Alternative for Buyers
Buyers should also consider leasing an EV. Leased vehicles are treated as commercial purchases. This means they are exempt from strict income and sourcing rules. Dealers can claim the full $7,500 credit on almost any EV. They can then pass these savings to you through a lower monthly payment. This is a great option for many people.
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