What to Know About the Expiring Electric Vehicle Tax Credit

What to Know About the Expiring Electric Vehicle Tax Credit

You may be in the market for an electric vehicle, but be aware that the federal electric vehicle (EV) tax credit is set to expire on September 30, 2025.

What Is the Federal Electric Vehicle (EV) Tax Credit?

The federal electric vehicle (EV) tax credit is offered to individuals and their businesses who purchase a qualifying plug-in EV or fuel cell electric vehicle (FCV). There are different income thresholds to qualify for the tax credit, and the vehicle you are purchasing must also meet specifications defined by the IRS, such as manufacturing requirements and suggested retail price (MSRP) limits.

The Changes

The One Big Beautiful Bill Act (OBBBA) has made multiple changes to the tax landscape, and several energy credits will be expiring soon as an effect. The new and used EV tax credit, originally expiring in 2032, will now expire on September 30, 2025.

The IRS has clarified that individuals may still claim this credit if they enter into a binding contract prior to the September 30th deadline and a payment, such as a downpayment or trade-in, has been made.

EVs purchased before September 30, 2025 may be eligible for a tax credit of up to $7,500 for new qualifying EVs, and up to $4,000 for used EVs. There is no tax credit offered for EVs purchased after this date.

Next Steps

With the expiration date set for the tax credits, it’s important to remind yourself not to rush into a purchase. Do your research and find an EV that fits your budget and needs. You can visit the U.S. Department of Energy’s website to help you narrow your search for eligible vehicles.

Once you’ve finished your research, consider buying soon to take advantage of the tax credit. Sound Credit Union offers a 0.25% APR Green Auto Loan discount so you can save even more!