Thinking of Buying an Electric Car? Act Fast as Trump Administration Ends Key Tax Credit

With the electric vehicle credit expiring in less than two months, now is the time to buy an electric car.

You’ll have until Sept. 30, 2025 to receive a federal tax credit for buying an electric vehicle. Until then, you can receive a tax credit of $7,500 for a new electric vehicle or $4,000 for a used electric car.With a tax credit, your tax bill is reduced dollar-for-dollar by a certain amount.

The Trump administration’s recent tax legislation, the One Big Beautiful Bill, is phasing out the tax credits, which had been set to run until 2032.

“Car prices are set by supply and demand. Look for dealerships with a large supply of EVs on the lot, and keep in mind that incentives will likely improve as September 30 gets closer,” said Sean Tucker, lead editor for Kelley Blue Book. “Shoppers shouldn’t wait until the absolute last day—the paperwork on the EV tax incentive can take a few days to process. But waiting until September will probably benefit many shoppers.”

Here’s what to know about the EV credit and how to take advantage of it before it goes away.

Tax Credits for New Electric Vehicles

In order to be eligible for the tax credit, the vehicle you purchase needs to meet certain requirements. For example, the new car must have undergone final assembly in North America.

You’ll want to read the fine print on the government’s website to make sure your meet all of the qualifications.

There are two other important requirements to keep in mind: the ‘critical mineral’ and ‘battery component’ requirements. If a vehicle only fulfills one of these requirements, you’ll only receive a $3,750 credit, but if it meets both, you can get the full $7,500 credit.

The ‘critical mineral’ requirement asserts that a specific percentage of a car’s battery minerals must come from the United States or from a nation that has a free trade agreement with the U.S.—or be recycled in North America.

The ‘battery component’ requirement specifies that a certain percentage of battery parts must be made or assembled in the U.S.

Additionally, you’ll want to check out the price tag on the vehicle, as vehicles that are too expensive won’t qualify for the credit.

For new cars, the vehicle must be $55,000 or less. For vans, trucks, and sport utility vehicles, it must cost $80,000 or less. And if you don’t want to do the work of manually checking which cars are eligible, Edmunds has created a list of new electric vehicles that qualify for tax credits, which it’s compiled from U.S. Department of Energy data.

And most importantly, you may not be eligible if you earn too much money.

Your modified adjusted gross income (MAGI) must be $300,000 or less for married couples filing jointly, $225,000 or less for heads of households, and $150,000 for all other filers, according to the IRS.

Also, if you opt to lease an electric vehicle, rather than buy a new one. You won’t receive the tax credit. This is because leased vehicles are considered commercial vehicles by the IRS, so the full $7,500 tax credit goes to the company doing the leasing.

However, a customer is still free to ask for a discount on the lease of an electric vehicle, but it’s up to the company to determine or whether or not to provide one.

Tax Credits for Used Electric Vehicles

The requirements for a used vehicle are a little bit different.

To qualify for the $4,000 tax credit, the vehicles must be at least two years old and cost no more than $25,000. You also need to buy the used electric vehicle from a dealer, as you won’t qualify for the tax credit if you buy a used electric vehicle from a private party.

And finally, you must make $150,000 or less when filing a joint tax return, $112,500 or less when filing as head of household, and $75,000 for all other filers.

The Bottom Line

To nab a nifty tax credit for an electric vehicle, you’ll need to act before September ends. Dealers and auto companies want electric vehicles to sell before September ends, and they are willing to offer incentives to buyers.

“We anticipate that both automakers and dealers will look to win over as many customers as they can before the tax credit expires. We may see improving incentives throughout the rest of summer,” Tucker said.

Rather than waiting to receive a tax credit on your 2025 taxes, you may also be able to transfer the tax credit to the dealership by requesting a discount on the price of a new or used electric vehicle.

“It will lower your payment, and you see it upfront,” said Ronald Montoya, senior consumer advice editor for Edmunds.

When you receive the discount instead of getting the tax credit, you’ll also need to take note of it when you file your taxes the next year—you’ll need to complete Form 8936 and attach it to your tax return.

And don’t wait until the last minute to shop, visit multiple dealerships and be on the lookout for incentives from dealers and car manufacturers.