A major policy change is about to reshape the market for new and used electric vehicles in the United States.
Goodbye to $7,500: The EV tax credit deadline quickly approaching
Donald Trump’s “One Big Beautiful Bill Act,” a wide-ranging package of tax and economic reforms, is already affecting many Americans. That includes workers in certain tipped jobs who will no longer have to pay federal tax on tips, as well as those who purchased, or are planning to purchase, a new or used electric vehicle in 2025.
When does the federal EV tax credit expire?
Before the bill was signed into law on July 4, new and leased electric vehicles qualified for a $7,500 federal tax credit, while used EVs came with up to $4,000. These incentives helped narrow the price gap between electric and gas-powered cars.
Not every EV qualified, with eligibility depending on a number of criteria that differed for new, used, and leased vehicles.
The “One Big Beautiful Bill Act” ends the federal EV tax credit on Sep. 30, which is expected to reduce the number of new and used EV purchases across the United States.
IRS extends flexibility for buyers
The IRS has recently provided a small amount of flexibility for buyers trying to meet the deadline. To qualify for the tax credit, future owners now only need to complete the purchase of their EV by September 30, rather than take delivery by that date.
What’s better value, electric or gas?
Although electric vehicles are cheaper to operate than gas-powered cars, their higher upfront cost remains a barrier for many buyers.
The incentives were originally designed to make EVs more appealing by lowering the initial purchase price. At present, a new electric vehicle costs around $9,000 more than a comparable gas-powered car, while the difference is about $2,000 for used vehicles.
Despite the elimination of the tax credit, many experts maintain that EVs are still more cost-effective in the long run.
“Quickly you’ll end up paying less than a gas car because it costs much less to fuel, and it needs almost nothing for maintenance,” Senior Policy Director Ingrid Malmgren of the nonprofit advocacy group Plug In America told CBS.
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