The EV Tax Credit Is Going Away. Here’s What You Need To Know

If you’ve been thinking about buying or leasing an electric car, there’s no time like the present. President Donald Trump’s “Big Beautiful Bill” brings an end to the longstanding federal EV tax credit within a matter of months. 

So if you want the best deal on an EV, the clock is ticking. 

“You stand to benefit in no way, shape or form by waiting,” said Ivan Drury, director of insights at Edmunds. “If you’ve got any inkling that you have a future purchase on your hands, you might as well just do it now.”

Here’s what you need to know about the end of the $7,500 federal EV tax credit and how to navigate a purchase. 

When Is The EV Tax Credit Going Away?

You can only claim the $7,500 discount on vehicles purchased and placed into service by Sept. 30. Under the Inflation Reduction Act of 2022, the program was supposed to stick around through the end of 2032. That’s no longer the case, and now the credits will cease to exist when summer 2025 ends. 

Which EV Tax Credits Are Ending?

All of them. The Sept. 30 deadline applies to all three federal EV tax credits, known as 30D, 25E and 45W. Those are the policies that subsidize new EV purchases, used EV purchases and commercial/leased EVs, respectively.

How Much Is The EV Tax Credit Worth?

The policy can get you $7,500 off of a new car for EVs that qualify. The credit for used plug-in cars covers 30% of a vehicle’s purchase price, up to $4,000. 

For leases, the leasing company claims the $7,500 credit and is able to pass that through to customers in the form of a discounted monthly payment. 

Which Cars Qualify For The EV Tax Credit In 2025?

Photo by: Tesla

Sourcing requirements that prioritize domestic production of vehicles, batteries and raw materials mean that a small subset of plug-in vehicles qualify for 30D, the EV-buying credit. MSRP caps of $80,000 for SUVs and trucks and $55,000 for sedans also apply. 

Some of our favorite EVs that qualify for the tax credit include the Cadillac Optiq, Chevrolet Equinox EV, Hyundai Ioniq 9, Kia EV6 and Tesla Model Y.

Here’s the full list of EVs that qualify for the tax credit in 2025:

Any new EV that’s leased can qualify for the tax credit, since those restrictions don’t apply. 

Used EVs must cost under $25,000 and be three model years old. Some great options there include the Chevy Bolt EV and Tesla Model 3. You might even be able to find a BMW i3 plug-in hybrid or an older Tesla Model S. Check out our full guide to the best used EVs here. 

What Are The Income Limits For The EV Tax Credit?

Photo by: Hyundai

To qualify for a tax credit under 30D, buyers must meet the following income limits. They can use either the current year’s adjusted gross income or the previous year’s. 

• $300,000 for married couples filing jointly
• $225,000 for heads of households
• $150,000 for all other filers

For 25E, the used EV credit, the following income limits apply:

• $150,000 for married filing jointly
• $112,500 for heads of households
• $75,000 for all other filers

How To Claim The EV Tax Credit

Importantly, the EV tax credit is now available as an upfront rebate through the dealership rather than a refund at tax time.

So you won’t have to wait until next April to claim this discount, which was historically the case. That could go a long way toward making a typically expensive EV purchase a little more palatable. 

2023 Ford Mustang Mach-E GT

Photo by: Patrick George

Here’s how to claim the credit, according to the IRS. At the dealership, the salesperson should be able to check the vehicle’s eligibility and will print out a record of the transaction. It’s up to you, the buyer, to determine whether you qualify under the income requirements. 

Then, decide if you’d like to claim the credit at the point of sale or at tax time. If you elect to transfer the credit to the dealer, you can get an upfront discount. Either way, you need to file IRS Form 8936 at tax time. 

If you’re leasing—as the majority of EV buyers do these days—you don’t need to worry about any of that, since the credit doesn’t actually go to you directly. Just make sure the monthly price is right, and drive away.

Contact the author: Tim.Levin@InsideEVs.com