$7,500 Tax Credit for Electric Cars to be Applied Instantly

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In its efforts to get one million electric cars in the road by 2015, the Obama administration is changing the tax credit program to make it easier for buyers to realize the savings.

Currently, if you buy an electric vehicle, you get a $7,500 credit when you file your income taxes. You might have to wait a year before seeing the benefit.

Under changes announced Tuesday, that credit would be given at the dealership when you buy the car.

“The current credit is going to be reformed so it will be claimable by dealers or others and then with clear requirements that the benefit of the credit is to be passed along to the consumers,” said David Sandalow, the Department of Energy’s assistant secretary for policy and international affairs. “It is more effective as an incentive like that than to provide it as a credit that has to be applied against income tax returns filed at a later time.”

Regulatory details have yet to be worked out, so it is unclear when the changeover will happen.

What will not change, however, is the cap on the credit. When a manufacturer sells 200,000 vehicles, the credit goes away for that particular model. Lawmakers were hoping to raise that to 500,000.

General Motors fears the cap will eventually hurt sales of the electric Chevrolet Volt, which sells for $41,000 before the credit is applied.

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