Electric Vehicle Tax Credit 2025: Complete Guide | EXPIRED September 30

On September 30, 2025, the federal $7,500 electric vehicle tax credit expired. If you were planning to buy an EV, this changes everything. But don’t panic—there’s still a way you might qualify, and alternatives exist.

Critical Update: September 30, 2025 Deadline PASSED

The One Big Beautiful Bill Act (OBBBA) terminated both the $7,500 new EV credit and $4,000 used EV credit after September 30, 2025. This means:

• New EVs purchased after Sept 30: No federal credit
• Used EVs purchased after Sept 30: No federal credit
• EVs under binding contract by Sept 30: Still eligible even if delivered later

Can You STILL Get the $7,500 Credit? (Exception Explained)

Yes, but only if you signed a binding purchase contract AND made a payment on or before September 30, 2025.

The IRS allows the credit if you acquired the vehicle before the deadline, even if you take possession after September 30. You demonstrate acquisition through a binding written contract and payment made by the deadline.

What Qualified Before September 30, 2025

New EV Requirements (Before Expiration):

The tax credit offered up to $7,500 for qualifying new electric vehicles purchased before September 30, 2025. Qualification required:

Vehicle Requirements:

• Final assembly in North America
• Battery capacity of at least 7 kWh
• MSRP caps: $55,000 for sedans, $80,000 for SUVs/trucks/vans
• Critical minerals and battery components from qualifying countries

Income Limits (MAGI):

• Single filers: $150,000
• Head of household: $225,000
• Married filing jointly: $300,000

Used EV Credit (Before Expiration):

Qualifying used EV purchases could fetch up to $4,000, limited to 30% of the car’s purchase price. Requirements included:

• Purchase price: $25,000 or less
• Vehicle at least 2 years old
• Income limits: $75,000 (single), $112,500 (head of household), $150,000 (married)
• Only first transfer qualifies
• Claim once every 3 years

What Happened to EV Leasing Incentives?

Bad News: The commercial clean vehicle credit, which made leasing attractive, also expired on September 30, 2025. Previously, leased EVs bypassed strict sourcing and income rules since they were classified as commercial purchases.

How to Claim If You Qualified Before the Deadline

If you purchased an eligible EV before September 30, 2025:

1. Point-of-Sale Transfer: Transfer the credit to an eligible dealership for an immediate discount at purchase
2. File Form 8936: Claim the credit when filing federal taxes for the year you bought the vehicle
3. Provide VIN and Documentation: Include vehicle identification number and transfer election date

Important: The credit is non-refundable—it reduces tax liability but won’t generate a refund beyond zero.

Alternatives Now That the Credit Expired

1. State and Local Incentives

Many states still offer EV incentives:

• California: Clean Air Vehicle program with carpool lane access and state rebates up to $2,000
• New York: State rebates available
• Colorado: Zero-emission vehicle tax credits for new EVs

Note: Some states prohibit “double-dipping” federal and state credits, so check local rules.

2. Manufacturer Incentives and Financing

Good deals still exist; they’re just no longer driven by the $7,500 federal tax credit. Recent examples include:

• Ford Mustang Mach-E: 0% financing for 72 months
• BMW i4: 1.99% for 60 months with $7,500 off
• Kia EV9: $10,000 manufacturer discount
• Lucid Air: $12,500 cash incentive

3. Home Charger Tax Credit

If you install qualified vehicle refueling and recharging property at your home before July 1, 2026, you may be eligible for the Alternative Fuel Vehicle Refueling Property Tax Credit.

What Does This Mean for EV Buyers?

Short-Term Impact

Without federal incentives, EV adoption may slow temporarily. However, automakers are compensating with aggressive manufacturer incentives to maintain sales momentum.

Long-Term Perspective

EVs still offer advantages:

• Lower fuel costs (electricity vs. gasoline)
• Reduced maintenance (fewer moving parts)
• State-level incentives remain
• Manufacturer discounts filling the gap

Expert-Backed Sources to Monitor

Stay informed with these authoritative resources:

1. IRS.gov Clean Vehicle Tax Credits – Official federal guidance and updates
2. FuelEconomy.gov – Vehicle eligibility database (historical reference)
3. Edmunds EV Incentives Page – Manufacturer offers and state incentives
4. JD Power EV Guide – Market analysis and buying recommendations
5. NerdWallet Tax Guide – Tax strategy for qualified purchases

FAQs: Electric Vehicle Tax Credit 2025

Bottom Line: Act Smart, Not Fast

The federal EV tax credit ending doesn’t mean EVs are bad investments. Calculate total cost of ownership, explore state incentives, negotiate manufacturer discounts, and consider long-term fuel savings. The landscape changed, but opportunities remain.