The IRS has issued new guidance on the clean vehicle tax credits that are scheduled to end on September 30, 2025. These credits—covering used clean vehicles, new clean vehicles, and commercial clean vehicles—have been an important sales tool for dealerships, and the new FAQ helps clarify how the transition will be handled.
What Dealers Need to Know
- Acquired vs. Placed in Service – The IRS now makes a clear distinction: a vehicle is “acquired” when there’s a binding sales contract and a payment, even if it’s just a small down payment or a trade-in. However, a vehicle is only “placed in service” once the customer takes possession. Dealers should prepare to explain this difference to customers eager to secure credits before the deadline.
- Credits After the Deadline – If a customer acquires a vehicle on or before September 30, 2025, they may still qualify for the credit when they take possession—even if delivery happens after the cutoff date. This flexibility can help dealers manage orders and deliveries around the expiration.
- Transferring Credits – The election to transfer a clean vehicle credit should be made at the point of sale, not earlier. That means the transaction isn’t finalized for credit purposes until the buyer takes delivery.
- Time of Sale Reports – Dealers are expected to provide a time of sale report to customers at delivery, or within three days of the customer taking possession. This report is essential for the customer to claim their credit.
- Energy Credits Online Portal – Dealers who aren’t already registered for the Energy Credits Online portal should act quickly—new registrations will close on September 30, 2025. Registered dealers will still have limited access to the portal afterward, including the ability to file and update reports.
What’s Still Unclear
The IRS has left some questions unanswered, including how the acquisition rules apply to leased vehicles, how pending reports will be handled, and how long after the deadline dealers will be able to file late reports.
The Road Ahead
For dealership leaders, the new FAQ highlights both compliance requirements and opportunities to capture last-minute sales. Now is the time to:
- Train sales staff to explain how the credit rules work.
- Make sure processes for time of sale reporting are solid.
- Confirm portal registration before the deadline.
- Monitor for additional IRS updates.
Dealers who act now can smooth the customer experience, capture more year-end business, and avoid compliance headaches. For the full IRS FAQ, visit: IRS FAQ on Clean Vehicle Credits.
Matthew Marcoullier is a director at ARB. He focuses primarily on financial accounting and consulting services for auto dealerships, commercial businesses, and closely-held businesses. Matt previously served as a Senior Auditor for the State of Maine Department of Audit.
