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BBB – Deduction of Tax Credit from Advertised Price

Friday, March 03, 2023 9:00 AM | Anonymous member (Administrator)

The BBB has become aware that some dealers may be lowering the amount of their advertised prices by including federal tax credits that are available for certain electric vehicles (EVs) and only to certain consumers who qualify. An example would be the following:

  • MSRP     $60,000
  • Tax credit       $7,500 (or up to $7500 as an alternative)
  • Sale price advertised     $52,500

Dealers are prohibited by rule 475.310 from advertising prices that are not available to consumers. The rule states, “Purchasers shall be able to purchase all vehicles described by the advertisement at the advertised price.”

The sale price of $52,000 is not available to purchasers for many reasons.

First, tax credits are not manufacturer or dealer discounts that are applied at the time of sale, creating an immediate savings to consumers. Taxpayers who qualify may claim a tax credit at the time of their annual income tax filing but not before that. 

In addition, taxpayers may qualify for limited amounts of the up to $7,500 federal tax credit because individuals are entitled to a tax credit amount only to the extent of their income tax liability with a cap of $7,500 for the taxable year. In other words, consumers must owe money to the IRS to claim a tax credit.      

There are also income caps to qualify for the credit, as well as restrictions based on where the vehicle is manufactured and the amount of domestic content.

Most consumers will not qualify for the entire $7,500 tax credit, if at all.

Third, tax credits apply only to certain EVs that meet precise standards set out in the legislation creating the tax credits. Non-qualifying EVs do not provide tax credit to consumers. The limitations on the types of EVs that qualify for the tax credit are numerous. 

There will soon be additional qualifications for batteries installed in EVs, making the tax credit less available.

As a result, dealers should not reduce their advertised price by the amount of any tax credit because that reduced price is not available at the time of sale. Moreover, not all consumers or vehicles will qualify..  

The BBB suggests that dealers should certainly advertise the availability of tax credits to fully inform consumers that they may apply to certain vehicles and that consumers must first qualify to receive them. Well-crafted disclosures are important. However, any tax credit amount must not be included in the advertised sales price.

The BBB will notify dealers when such price advertisements come to the attention of the BBB in an effort to preserve a marketplace that is fair to all dealers and truthful for consumers. The BBB remains committed to ensuring that all dealers compete on a level playing field as we have for the duration of the BBB/CATA advertising review program. As most dealers know, the BBB/CATA advertising review program has existed since 1996 and has provided valuable notice to dealers when there may be advertising issues that impact the Illinois Motor Vehicle Advertising Regulations which are enforced by the Office of the Illinois Attorney General. These regulations were developed with Illinois dealer input and reflect standards that the dealer community considered important to create a fair and truthful marketplace for business and consumers. 

The BBB is proud to work continuously since that time to assist dealers with respect to these rules.

Patricia Kelly, BBB Senior Counsel, can be reached with questions at

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


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