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Don’t Drive Past Savings: Your Guide to the EV Tax Credit Expiring September 30, 2025
Deadline Alert: If you’ve been eyeing an electric vehicle (new or used)—or planning a business fleet purchase—this is your friendly-but-firm wake-up call. The generous federal tax credits are vanishing after September 30, 2025. Here’s why that matters, and what you can still do about it.
What’s Ending—and Why You Should Care
The One Big Beautiful Bill Act (OBBBA) has pulled the plug early on the IRA-era EV tax credits. Normally scheduled to continue through 2032, these credits will now expire on September 30, 2025—with no phase‑out, no grace period, and no grandfathering for later deliveries.
That means:
New EV credit: Up to $7,500
Used EV credit: Up to $4,000
Commercial EV credit: Ranges from $7,500 to $40,000, depending on vehicle weight
Key Dates and What “Acquired” Really Means
To qualify, you must take possession of the vehicle by September 30, 2025—that’s the cut-off, plain and simple. A signed contract or a scheduled delivery after that date won’t make the cut.
EV Leasing and the Tax Credit
When an electric vehicle (EV) is leased, the clean vehicle tax credit doesn’t go directly to the consumer. Instead, it goes to the manufacturer or dealer offering the lease. Most automakers pass this benefit along in the form of lower lease prices or reduced monthly payments.
This is why the so-called “leasing loophole” became popular—leasing allowed EVs to qualify for the full $7,500 credit even if the same model didn’t meet the purchase requirements. However, that provision ends on September 30. After that date, new leases or purchases delivered later will no longer qualify for this arrangement.
What Dealers and Buyers Need to Do Now
Act now: If you’re in the market, confirm availability or delivery timelines well before the cut‑off.
Understand transfer options: You can transfer the credit to the dealer at purchase, getting the discount up front, or claim it later on your tax return via IRS Form 8936.
Know eligibility rules:
○ New EVs: Must meet sourcing and assembly standards; have price caps ($55K for cars, $80K for vans/SUVs/trucks); income limits apply (single: $150K, head of household: $225K, married filing jointly: $300K).
○ Used EVs: Vehicle must be at least two model years old, sold by a dealer, cost ≤ $25K; credit is the lesser of $4K or 30% of sale price.
○ Commercial EVs: For business use, up to $40K depending on weight; no income limits.
Big Picture: Market Impact & Strategic Timing
According to analysts, there’s likely to be a spike in EV purchases this summer as buyers rush to beat the deadline, followed by a potential drop in sales come October. One Harvard study forecasts a 6% reduced EV market share by 2030, though the legislation saves the government $169 billion over a decade. (Reuters)
Still, with the timeline shrinking fast, savvy buyers can still capture significant savings—but timing is everything.
Summary at a Glance
Credit Type | Amount | Eligibility | Deadline |
New EV (individual) | Up to $7,500 | Meets sourcing, assembly, price, income rules | Must take possession by Sep 30, 2025 |
Used EV | Up to $4,000 (or 30%) | Vehicle ≥2 years old, ≤ $25K | Same as above |
Commercial EV | Up to $40,000 | Business use, weight-based criteria | Same as above |
Leasing loophole | Up to $7,500 | Ends after Sep 30 | Included above |
Takeaway: Don’t Wait (Too Long)
If an EV is on your wish list, now’s the time to move—firm up orders, confirm delivery dates, and check credit eligibility. Or speak with your tax adviser to ensure everything lines up. Those tax credits won’t wait.
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