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Advertising EV Tax Credits in 2024

Friday, February 02, 2024 9:00 AM | Anonymous member (Administrator)

The Better Business Bureau has become aware of certain price advertising where EV tax credits are included in the amounts of the advertised prices.

The Illinois Motor Vehicle Advertising Regulations address this issue in Rule 475.310 which states that purchasers “shall be able to purchase all vehicles described by the advertisement at the advertised price.”  Usually, the application of this rule involves the inclusion of limited rebates in prices. 

Separately, Rule 475.530 promotes the same principle by requiring that only rebates that are available to all consumers may be included in advertised prices. Limited rebates available only to qualified consumers may not be included. 

An EV tax credit is not a rebate.  The source of the tax credit is the government not the vehicle manufacturer.  However, a tax credit is an amount of money that is available only to certain consumers who qualify for it, analogous to the way limited rebates work. 

This year there are new standards impacting how EV tax credits are applied to vehicles.

First, the advertised vehicle must be one that qualifies for the tax credit by being assembled in America and having an MSRP of $55,000 or less for cars and $80,000 or less for SUVs and trucks.

Second, the battery in the vehicle must qualify in two ways: the raw materials must be mined in the US, or a trade partner and a percentage of the components must be manufactured or assembled in the US.

The BBB does not intend to delve into vehicle qualifications as it looks at EV credit issues, but these are important to understand for all.  

The BBB focus is how the inclusion of EV tax credits in prices affects consumers and the competitive marketplace for dealers.

In 2024 the full amount of the $7500 EV tax credit is available to certain consumers who:

  1. Meet the mandated modified adjusted gross income caps of $300,000 for married joint income tax filers, $225,000 for heads of households or $150,000 for all others;
  2. Purchase for their own use; and
  3. Use the vehicle in the US.

Only a limited group of consumers who meet all three of these criteria are eligible for the $7500 EV tax credit.  Therefore, dealers who include the EV tax credit in prices run afoul of Rule 475.310 since consumers who do not meet these requirements cannot purchase advertised vehicles at the advertised prices. 

Leased vehicles are also subject to the EV tax credit for a larger pool of qualifying vehicles.  Consumers must meet the requirements when they lease.  Therefore, dealers must refrain from including the EV tax credit in advertised lease offers as well because, while consumers may qualify for a lease they may not qualify for the tax credit.  

The EV tax credit is available to qualifying consumers in the sale of used EVs with a maximum price of $25,000 by IRS registered dealers.  The amount of the tax credit is 30% of the sale price up to $4000.  Consumers with a modified adjusted gross income of $150,000 a household or $75,000 an individual qualify.  Rule 475.310 applies here as well.  Dealers may not include EV tax credit in advertised prices because the prices are not available to all consumers, only to those who qualify for the EV tax credit.

While the area of EV tax credits can be complicated as to qualifications for vehicles and for consumers, who must determine what their modified adjusted gross income is, the idea of including these tax credits in advertised prices is very simple.  Doing so excludes consumers who do not qualify and, therefore, impacts Rule 475.310.

The BBB will be watchful in this area to ensure that dealers have a level playing field and avoid advertising in a way that negatively affects fairness in the marketplace.

Chicago Automobile Trade Association
18W200 Butterfield Rd.
Oakbrook Terrace, IL 60181 
(630) 495-2282


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