If you're thinking about purchasing an electric vehicle and can make up your mind in the next few weeks, it could save you thousands of dollars.
As part of the "Big Beautiful Bill" that was signed into law on July 4, 2025, the federal EV tax credit that was previously scheduled to expire in 2032 will now end on Sept. 30, 2025. The tax credit provides up to $7,500 back on purchases of new EVs, or up to $4,000 for used electric vehicles.
The move by congressional Republicans and signed by President Donald Trump was designed to help pay for the continuation of tax cuts from Trump's first term, which some say are most helpful for the wealthiest taxpayers. Congress gutted a host of other clean-energy tax breaks in the bill, essentially repealing much of the Inflation Reduction Act passed under President Joe Biden.
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The EV credit's expiration sets up a weird end of 2025 for an auto industry that also faces potential challenges from Trump's tariff policy. Thanks to international supply chains for parts and materials, tariffs are likely to increase the cost of cars and trucks even if they're assembled in the US.
While buying a vehicle isn't usually a decision that should be rushed, the amount of money involved in the tax credit makes it a very good time to act quickly. "My ordinary advice for everyone all the time is don't be in a big hurry, take your time and make a careful decision," Sean Tucker, lead editor at Kelley Blue Book, told me. "This is the one circumstance where you might want to be in a big hurry."
A recent rule decision by the IRS makes the imminent deadline a little easier to meet. Instead of having to receive delivery of the electric vehicle by Sept. 30 in order to claim the EV tax credit, the IRS says that you only need to complete the purchase before the end of the month.
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What is the EV tax credit?
Right now, the federal government provides a credit of up to $7,500 for a new electric vehicle, plug-in hybrid or fuel cell electric vehicle. The credit is split into two equal parts, with a $3,750 credit each if the vehicle meets requirements for the sourcing of materials for the battery components and critical materials. Because of those requirements, only a handful of vehicles qualify. You do need to meet some income limits -- you can't have taxable income above $150,000 if you file individually, $300,000 if you're married filing jointly or $225,000 if you file as head of household.
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