The clock is ticking for anyone planning to buy an electric vehicle (EV) in the United States. The federal tax credit of up to $7,500 for new EVs and $4,000 for used ones will end on September 30, 2025, as part of the “Big Beautiful Act” passed by Congress.
After this date, these incentives will disappear unless Congress decides to extend or reinstate them. This is a critical opportunity for anyone looking to buy an electric car and save money, but time is running out.
Why is This Deadline So Important?
The expiration of these tax credits represents a major shift for the EV market. Without the credits, new EVs, which already cost, on average, $9,000 more than gasoline-powered cars, will become even less affordable.
The situation is similar in the used EV market, where the $4,000 incentive could make a big difference in whether someone can afford an electric car.
For many people, losing this tax break could feel like missing out on the equivalent of a family vacation. Tax experts are urging potential buyers to act quickly.
“Once the deadline passes, those tax breaks will simply disappear unless Congress makes an unexpected U-turn,” says a tax analyst. This warning highlights the urgency of buying before it’s too late.
Who Can Get the EV Tax Credit?
Although the federal tax credit is attractive, not all electric vehicles are eligible for it. The rules are specific, and consumers need to consult a tax advisor to ensure their chosen vehicle qualifies.
To qualify for the credit, an EV must meet several conditions, such as being assembled in North America and having a battery of at least 7 kWh. Additionally, the vehicle must comply with sourcing rules for critical materials and minerals.
The amount of the credit depends on whether the EV meets one or both of the requirements. If the vehicle meets only one, the credit is $3,750. If it meets both, the credit increases to $7,500.
However, there are also income limits: couples filing jointly must earn under $300,000 to be eligible. There are two ways to claim the credit: either as an instant discount at the dealership or when filing taxes using IRS Form 8936.
The Long-Term Financial Impact of EVs
Even with the disappearance of the tax credit, purchasing an EV can still be a smart financial decision. While new EVs are generally more expensive than their gasoline counterparts, they offer substantial savings in the long run.
A study published in the journal Joule in 2020 found that, on average, EV owners save about $7,700 in fuel costs over 15 years compared to gasoline car owners. In states where electricity is cheaper, like Washington, those savings can reach up to $14,000.
Additionally, EVs have fewer maintenance costs. They don’t require oil changes, and they don’t have issues with exhaust systems or complex fuel systems. This lower cost of ownership can help offset the higher initial price of an EV.
What Are Your Options After the Deadline?
Manufacturers and dealerships are already preparing for the loss of the federal tax credit. Expect aggressive discounts, direct rebates, and additional promotions like discounted or free home chargers to maintain the appeal of EVs once government support ends.
If an EV is on your radar, now is the time to make your move. If you wait until after the September 30, 2025 deadline, you risk missing out on the financial advantage provided by these federal tax credits.
With the deadline for the federal EV tax credit fast approaching, it’s more important than ever for buyers to take action before September 30, 2025. The expiration of these tax incentives could significantly impact the affordability of electric vehicles, especially for new buyers and those looking at the used market.
Be sure to check the eligibility requirements, consult a tax advisor, and consider how the long-term savings from owning an EV can still make it a worthwhile investment. With manufacturers and dealers offering additional promotions, now is the best time to take advantage of the current opportunities before the clock runs out.
