Quote:
Originally Posted by Isaac Zachary
I'm no lawyer, and I truely hope that the tax credit is no longer limited to one's own owed taxes. But the term "the credit which would be allowed to such taxpayer" sounds to me like the credit that "would be allowed" if that taxpayer didn't choose to have it applied to the point-of-sale. In other words, if the tax payer "would be allowed" only $500 of that tax credit because at the end of the year he only owes $500 in taxes, then it sounds to me like that's the amount that "shall be allowed to the eligible
entity."
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I'm not a lawyer either but I can read the text. It says "the credit which would be allowed to such taxpayer" and then clarifies "with respect to the vehicle for
which the credit
is allowed under subsection (a)" Section A has specific rules for what credit is allowed per vehicle. None of that section deals with income or taxed owed.
If you just took the credit yourself it would be nonrefundable and limited to the taxes you owe in the year you buy the car. If you transfer the credit to the dealer - it is no longer based on your income. Just as if you lease an EV the credit is not based on the buyer's income or taxes. For years people that don't make enough money to pay $7500 in taxes have been leasing EVs so that they can get the full $7500. Nothing changed for that lease "loophole" in the IRA and congress specifically added the option to buy the car and still get the full credit at point of sale. Personally I don't think this was an error or a loophole. Congress laid out rules that would make the credit more palatable to the general public that have been talked about for months - and then wrote in an exception that would allow FAR more people to take the credit.
However - if I'm wrong about this there is still the lease "loophole" for those that don't pay $7500 in federal income taxes. Nothing changed there. At the end of the day someone that doesn't pay a dime in income taxes can still get the full credit.