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Starting in January, the IRS will make the $7,500 federal EV tax credit available immediately via dealers. The Treasury Department announced the update on Friday, noting that dealers will have the option to “reduce the purchase price of the vehicle or provide cash to the buyer.”

The update also applies to buyers taking advantage of the $4,000 credit for used EVs.

Congress established the electric-vehicle credit when it passed the Inflation Reduction Act in 2022, but to date the IRS has only offered it via tax returns. That meant a long wait for folks who bought EVs early in the year. For example, TechCrunch senior climate writer Tim De Chant said he “hated waiting” for the reimbursement after taking home an Audi e-tron last year. “We bought our car in April. That took forever,” he added. 

Buyers must still be sure they meet income eligibility requirements (among other rules), either for the prior or current year. Plus, only certain EVs qualify. That remains a sticking point for folks who are interested vehicles that don’t, such as Toyota’s RAV4 and Prius Prime hybrids, since they’re not assembled in North America.

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The IRS says buyers will sign paperwork to transfer their credit to dealers, and dealers will give buyers “required disclosures,” including “written confirmation that the vehicle they’re buying is eligible for a credit and the credit amount.” The IRS says it’ll send dealers “advance payments within 72 hours.” Buyers will have to pay the IRS back later if it finds they don’t actually qualify.

Folks on the website formerly known as Twitter questioned whether dealers would handle credits fairly. “Will the dealer just inflate the price of the car?,” said one user. “I mean, I still want one, but now anticipating even more magical fees added to dealers’ stock. :D,” another added.

There do not appear to be any restrictions preventing companies that sell directly to customers — such as Tesla and Rivian, from taking advantage of the IRS’ new system. Rivian did not immediately respond when TechCrunch asked whether it planned to take advantage of the update.

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