Electric Vehicle Credits Are Ending Soon Under the One Big Beautiful Bill.  What You Need to Know

If you’ve been thinking about buying an electric vehicle (EV) or plug-in hybrid car, you should purchase it as soon as possible in order to claim the EV credit on your 2025 taxes or lower your purchase price.

As part of the One Big Beautiful Bill (OBBB), the current federal EV tax credit — up to $7,500 for new EVs and up to $4,000 for used EVs — will no longer be available on your 2025 taxes (the ones you file in 2026) for EVs purchased after September 30.

If you were already planning to make the switch to an EV or purchase a new one, acting before the end date means you still may be able to take advantage of the credit.    

Key takeaways

• The federal EV tax credit of up to $7,500 for new EVs and $4,000 for used EVs will end for purchases made after September 30, 2025.
• The EV charging equipment credit will remain available on purchases made by June 30, 2026, offering up to $1,000 or 30% of hardware and installation costs.
• Eligibility rules based on income, cost of the EV, vehicle assembly location, and battery components still apply until the credit expires.

How is the EV tax credit changing?

The specific tax credit changes include:

• $7,500 credit for new EVs ending for purchases after September 30, 2025.
• $4,000 credit for used EVs ending for purchases after September 30, 2025.
• EV charging equipment credit offers up to $1,000 (or 30% of qualifying hardware and installation costs, whichever is less) and will end for purchases made after June 30, 2026.

Will the EV tax credit changes affect you?

The elimination of the credit will affect different people in different ways — particularly those counting on the credit to make an EV more affordable or lower their taxes.

To qualify for the federal EV tax credit on your 2025 taxes (the ones you file in 2026), the vehicle must be purchased by signing a contract and making a downpayment or trade-in by September 30. In other words, it’s not enough to sign a purchase agreement before the end date. You have to pay a downpayment or trade-in a car.

Other things to look out for if purchasing an EV by September 30, 2025:

• Income Limits: Even if you can purchase by September 30, 2025 and possibly get the Clean Vehicle Credit, there are income thresholds to look out for:
  • Income limit for new EVs is $150,000 for single filers, $300,000 for married filing jointly.
  • For used EVs is $75,000 for single filers, $150,000 for married filing jointly.
• Manufacturer Retail Cost Limits: The price for new vans, sport utility vehicles, and pick ups can not be more than $80,000 and other cars are limited to $50,000. Used electric vehicles must be purchased from a car dealer and have a sale price of $25,000 or less.
• Meeting the Assembly or Battery Requirements: The credit only applies to qualifying vehicles with final assembly  in the U.S., Canada, or Mexico.
• Installing Home Charging Equipment: While the EV tax credit is ending for purchases made after September 30, 2025, the charging equipment credit will continue for equipment purchased up to June 30, 2026, which could help offset part of the cost of going electric.

Plan ahead for the end of the EV tax credits

If you’ve been looking to buy a new or used EV, and were relying on the credit to help lower your taxes or the purchase price, it may be helpful to revisit your tax planning and paycheck withholding now, with this and other changes to the tax landscape in mind. 

Understanding the timing, eligibility requirements, and available alternatives can help ensure you make the most of the remaining time. Whether that means moving up your purchase date or looking into other incentives, the key is knowing the rules and deadlines before they arrive.

Navigating the new tax laws can be complex, but we’re here to help you get the best financial outcome. TurboTax will be up-to-date with the latest changes and guide you through the filing process and help you save money, whether you want to do your taxes yourself or have a TurboTax Live expert do them for you.