Thinking of Buying an Electric Car? Act Fast Before Tax Credits End

If you’re considering buying an electric car, now is a good time to act. The federal government’s tax credit for electric vehicles (EVs) will end on September 30, 2025.

Until then, you can save money with a tax credit—$7,500 for new electric vehicles and $4,000 for used ones. This tax credit lowers the amount you owe on your taxes, dollar for dollar.

The recent tax laws from the Trump administration, called the “One Big Beautiful Bill,” are ending these credits earlier than planned. They were supposed to last until 2032 but are now set to stop in 2025.
 

Here’s Why You Shouldn’t Wait

Car prices depend on supply and demand. As the deadline approaches, dealers may offer better deals or incentives to clear out their EV stock.

However, don’t wait until the very last day, since the paperwork for the tax credit might take a few days.
 

How the EV Tax Credit Works

 

• New EVs: Tax credits end September 30, 2025. Now is a good time to shop.
• Discounts: Instead of waiting until you file taxes next year, you might be able to get a discount on the car’s price directly from the dealership, thanks to the EV tax credit.
• Where to Shop: Look for dealerships with a good supply of electric cars; start shopping early.

 

Requirements for the Tax Credit

 

• Final Assembly: The new EV must be assembled in North America.
• Battery Requirements:
  • The car’s battery must contain a certain percentage of minerals from the US or countries with a free trade agreement, or be recycled in North America.
  • A percentage of battery parts must be made or put together in the US.
  • If only one of these is met, you get $3,750; if both are met, you get the full $7,500.
• Price Limits:
  • New cars: $55,000 or less.
  • Vans, trucks, SUVs: $80,000 or less.
• Income Limits:
  • Married couples filing together: $300,000 or less.
  • Head of household: $225,000 or less.
  • Other filers: $150,000 or less.
• Lease vs Buy: You don’t get the tax credit if you lease an EV. The dealership receives the credit instead. But you can ask if they’ll offer a discount on your lease.

 

Used Electric Vehicles

 

• The vehicle must be at least 2 years old.
• Price: $25,000 or less.
• You must buy the car from a dealer (not a private seller).
• Income limits:
  • Joint filers: $150,000 or less.
  • Head of household: $112,500 or less.
  • Other filers: $75,000 or less.

 

Tips for Buyers

 

• Shop around at different dealerships.
• Ask about discounts and dealer incentives.
• Consider asking the dealership to apply your tax credit to the price of the car upfront. This can lower your payment.
• When you get a discount instead of the tax credit, make sure to report it when you file taxes next year (using IRS Form 8936).

Manufacturers and dealers are motivated to sell EVs before the credit expires, so you might see better deals in the coming months.

Don’t wait until the last minute—start shopping now to get the best price and make sure the paperwork goes smoothly.

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