If you are in the market for a new or used electric car, plan to get it before September 30, 2025. The “Big Beautiful Bill” signed by President Trump on July 4 gets rid of the federal tax credit for electric vehicles (EVs) as of the end of September.

What You Need To Know

To get the federal tax credit of up to $7,500 for new EVs and up to $4,000 for used EVs, you will need to sign the purchase or lease paperwork by September 30.

Remember, there are income limits and other eligibility rules: 

• For new cars, your income must be under $300,000 if filing jointly, $225,000 if head of household, or $150,000 for all other filers. A list of eligible vehicles is available here.
• For used vehicles, your income must be under $150,000 if filing jointly, $112,500 if head of household, or $75,000 for all other filers. The vehicle must cost less than $25,000, be at least 2 years old, and be on its first resale. 
• In all cases, you must purchase from a dealership that has registered with the IRS Energy Credits Online portal and the dealership must submit a time-of-sale report to the IRS within 3 days of your purchase. Make sure you get a copy of that time-of-sale report and a copy of the confirmation of receipt from the IRS, and use those to fill out Form 8936 when it comes time to do your taxes. You need to file this form whether you receive the tax credit at the point-of-sale as an immediate reduction in what you owe the dealership or whether you decide to claim the tax credit at filing time. 

The end of the federal tax credit is relevant even if you plan to lease! When you lease, the leasing agent gets to claim a commercial clean vehicle tax credit on the vehicle, and many/most pass the value of that tax credit on to consumers, which explains in part why many EVs have such attractive lease deals. That commercial tax credit also goes away after September 30, so leasing may be more expensive come October. (As a reminder, you typically have the option to buy the vehicle at the expiration of your lease, at what could be a worthwhile price.) 

The “Big Beautiful Bill” also does away with the federal tax credit for installing EV charging at your home or business, but not until June 30, 2026. As a reminder, you only qualify for this federal tax credit if you live in a non-urban or low-income census tract, which you can check here. 

We expect that the end of the federal tax credit will create a bit of a mad dash for many consumers to get an EV before the deadline. So if you’re in the market, act soon. Our EV Finder can help you identify which EV model(s) best suit your needs. And don’t forget to apply for relevant state rebates, too! 

More Than Just The Tax Credits

The bill goes beyond cutting the federal tax credit to also: 

• End fines for automakers who fail to meet Corporate Average Fuel Efficiency (CAFE) standards, which were first established back in 1975, effectively rendering them moot; 
• “Rescind unobligated funding” for many clean energy and clean transportation programs; 
• Phase out the Advanced Manufacturing Production tax credit, which has helped get battery manufacturing plants started all across the country, although the phase-out will occur more slowly than feared. 

Of course, the bill has wide ramifications beyond the realm of clean transportation, but with this blog, we’re focusing on EVs. 

Looking Forward 

There’s no way to sugar-coat that the loss of the federal tax credit is a blow to the transition to EVs. This bill will not single-handedly stop the transition to EVs in the US, but it will slow it down at a time when we need the transition to accelerate for our climate and health. It will also make a technology that saves consumers significantly on operating costs less accessible for many people around the country. 

Globally, though, the transition is ongoing – and accelerating. As tabulated by Bloomberg New Energy Finance and reported in InsideEVs, globally, the sale of internal combustion engines peaked in 2017.

Bloomberg still expects the global EV market to grow by a quarter in 2025, dominated by China and Europe. 

And we at Green Energy Consumers aren’t going anywhere. We’ll still be here offering free educational webinars, hosting in-person EV events, and maintaining our EV Finder to help drivers more easily make the switch.