The Federal EV Tax Credit Is No Longer Available
As of September 30, 2025, federal tax credits for electric vehicles are no longer available for new purchases. The One Big Beautiful Bill Act (OBBBA), signed into law on July 4, 2025, eliminated the EV tax incentives that were originally part of the 2022 Inflation Reduction Act.
This means:
The $7,500 tax credit for new EVs has ended
The $4,000 tax credit for used EVs has ended
The commercial clean vehicle credit (up to $40,000) has ended
These credits were originally scheduled to remain available through December 31, 2032 under the Inflation Reduction Act.
What If You Purchased Before the Deadline?
If you acquired an EV on or before September 30, 2025, you may still be eligible to claim the credit on your taxes. The IRS clarified that the key date is when a binding written purchase agreement was signed and a payment was made—not necessarily when the vehicle was delivered.
Income limits (must be at or below for either the purchase year or prior year):
Filing Status | New EV | Used EV |
Single | $150,000 | $75,000 |
Head of Household | $225,000 | $112,500 |
Joint/Surviving Spouse | $300,000 | $150,000 |
To qualify, you must have:
Signed a binding contract by September 30, 2025
Made a payment (such as a down payment or trade-in) by September 30, 2025
If you met these conditions but took delivery after September 30, you can still claim the credit when you file your taxes.
EV Charger Tax Credit Still Available (Until June 30, 2026)
While the vehicle credits have ended, the Alternative Fuel Vehicle Refueling Property Credit for home EV charging equipment remains available through June 30, 2026. This credit covers up to 30% of the cost of purchasing and installing qualified charging equipment (up to $1,000 for personal use).
New Tax Benefit: Auto Loan Interest Deduction
The OBBBA introduced a new benefit for car buyers: an above-the-line tax deduction for auto loan interest of up to $10,000 per year. This applies to:
Loans originated after December 31, 2024
New vehicles purchased for personal use
First lien loans secured by the vehicle
Income limits apply: The full deduction is available for taxpayers with Adjusted Gross Income up to $100,000 ($200,000 for married filing jointly), phasing out completely at $150,000 ($250,000 for joint filers).
This deduction is available through 2028 and applies to any qualifying vehicle—not just EVs.
Are EVs Still Worth Buying Without the Tax Credit?
Even without federal tax credits, there are still reasons to consider an EV:
Lower fuel costs: Electricity is generally cheaper per mile than gasoline
Reduced maintenance: EVs have fewer moving parts and require less servicing
State and local incentives: Many states still offer their own EV rebates and incentives (check the Department of Energy's database for your state)
Manufacturer incentives: Some automakers may offer discounts to offset the loss of federal credits
Studies have shown that over the lifetime of the vehicle, EV owners typically save money compared to gas-powered cars due to lower operating costs.
Resources
IRS Clean Vehicle Credits: irs.gov/clean-vehicle-tax-credits
State EV Incentives: afdc.energy.gov/laws/state
FuelEconomy.gov: For vehicle comparisons and fuel cost calculators
Note: Tax laws are complex and individual circumstances vary. Consult a tax professional for advice specific to your situation.