The federal tax credit for electric vehicles (EVs) has been an essential incentive for taxpayers interested in lowering the cost of switching to clean energy. Recently, changes were made through the One Big Beautiful Bill that will affect when this credit ends. As a CPA firm, we want to ensure you understand the new deadline, why the credit is ending, and how to take advantage of it before time runs out.
What Is The EV Tax Credit?
The EV tax credit allows eligible taxpayers to claim up to $7,500 for new electric vehicles and up to $4,000 for qualifying used EVs. This credit directly reduces federal income tax liability, making EV ownership more financially accessible.
When Does the EV Tax Credit End?
Under prior law, the EV credit was scheduled to last through December 31, 2032. However, the One Big Beautiful Bill changed this timeline significantly. The new law ends both the new and used EV tax credits on September 30, 2025.
This means taxpayers only have a limited window left to benefit. Any qualifying EV purchase must be completed before this date in order to claim the credit.
Why Is the EV Tax Credit Ending?
Tax credits like this are generally created to jumpstart consumer behavior and support industries until they can stand on their own. By setting an end date, lawmakers are signaling that they expect the EV market to be mature enough to continue without subsidies.
How to Take Advantage Before It Ends
If you are considering an EV purchase, acting sooner rather than later is critical. Here are some key factors to consider before the September 30, 2025 deadline:
- Verify Eligibility: Not all EVs qualify. Requirements vary based on where the vehicle is manufactured, battery sourcing, and other factors.
- Know the Income Limits: The credit is phased out for higher earners. For new EVs, the thresholds are $150,000 for single filers, $225,000 for heads of household, and $300,000 for joint filers.
- Understand the Price Caps: Eligible vehicles must meet manufacturer’s suggested retail price limits—$80,000 for SUVs, trucks, and vans, and $55,000 for other cars.
- Don’t Wait Too Long: The September 30, 2025 cutoff is firm under current law. Waiting could mean losing out entirely on the credit.
- Look for Additional Savings: Many states offer their own incentives that can be combined with the federal credit for greater benefits.
Plan Your Taxes With A CPA
Because the EV tax credit rules are strict and evolving, it’s important to review your situation with a CPA before purchasing. We can help confirm eligibility, project your tax savings, and ensure the purchase fits within your overall financial plan.
The EV tax credit has been a valuable tool for taxpayers, but its availability is much shorter than initially expected. Thanks to changes under the One Big Beautiful Bill, the program will expire on September 30, 2025. If you are considering an electric vehicle, now is the time to act.
At CPA Nerds, we can help you evaluate whether an EV purchase makes sense for you and ensure you claim the credit before the opportunity disappears. Contact us today to get started.
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