$7,500 EV Tax Credit Will Vanish in Weeks, but a New IRS Rule Eases the Deadline

If you’re thinking about purchasing an electric vehicle and can make up your mind in the next few weeks, it could save you thousands of dollars.

As part of the “Big Beautiful Bill” that was signed into law on July 4, 2025, the federal EV tax credit that was previously scheduled to expire in 2032 will now end on Sept. 30, 2025. The tax credit provides up to $7,500 back on purchases of new EVs, or up to $4,000 for used electric vehicles.

The move by congressional Republicans and signed by President Donald Trump was designed to help pay for the continuation of tax cuts from Trump’s first term, which some say are most helpful for the wealthiest taxpayers. Congress gutted a host of other clean-energy tax breaks in the bill, essentially repealing much of the Inflation Reduction Act passed under President Joe Biden.

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The EV credit’s expiration sets up a weird end of 2025 for an auto industry that also faces potential challenges from Trump’s tariff policy. Thanks to international supply chains for parts and materials, tariffs are likely to increase the cost of cars and trucks even if they’re assembled in the US.

While buying a vehicle isn’t usually a decision that should be rushed, the amount of money involved in the tax credit makes it a very good time to act quickly. “My ordinary advice for everyone all the time is don’t be in a big hurry, take your time and make a careful decision,” Sean Tucker, lead editor at Kelley Blue Book, told me. “This is the one circumstance where you might want to be in a big hurry.”

A recent rule decision by the IRS makes the imminent deadline a little easier to meet. Instead of having to receive delivery of the electric vehicle by Sept. 30 in order to claim the EV tax credit, the IRS says that you only need to complete the purchase before the end of the month.

Watch this: Optimizing Your EV’s Efficiency Is Easier Than You Think

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What is the EV tax credit?

Right now, the federal government provides a credit of up to $7,500 for a new electric vehicle, plug-in hybrid or fuel cell electric vehicle. The credit is split into two equal parts, with a $3,750 credit each if the vehicle meets requirements for the sourcing of materials for the battery components and critical materials. Because of those requirements, only a handful of vehicles qualify. You do need to meet some income limits — you can’t have taxable income above $150,000 if you file individually, $300,000 if you’re married filing jointly or $225,000 if you file as head of household.

There’s also a credit for used EVs equivalent to 30% of the sales price up to $4,000. The list of qualifying vehicles here is more extensive, but the used EV market is also a lot smaller than the new EV market. Although that has been changing — more than 100,000 used EVs were sold in the US in the second quarter of the year, compared with more than 300,000 new EVs, according to KBB data.

To get the credit, you can either claim it on your tax return the following year or you can transfer the credit to the dealer so they can apply it to your purchase cost. That second option has become more popular since it’s easier and reduces your up-front cost.

You can also get the credit on leased vehicles. Dealerships are very familiar with applying credits toward leased EVs, Tucker said.

Should I buy an EV now before the credit ends?

The most important part of deciding whether to buy a car is to buy one when you’re ready. Don’t rush into a big purchase just because a tax credit is ending. The fact is that EVs are coming down in price and are often similar, when you consider the total cost of ownership, to the price of a gasoline-powered car. You should also consider that not every EV qualifies for this credit anyway — the one you’re eyeing might not see any change in pricing, at least not due to the credit expiring.

But the end of the credit does mean dealers will likely be looking to reduce their stock of electric cars by the end of September. That means if you’re in the market and you’re eyeing one of the qualifying vehicles, you may want to move to make a purchase before October, Tucker said.

There could be more strategy at play. Tucker suggested looking at dealers that have significant stocks of EVs, which may offer steeper discounts to get them off the lots before the prices go up. The best time to buy might be mid- or late September, right before the credit ends, to get the best deal possible.

“If I tell you it’s your last chance to save $7,500 on something, that’s a sentence you don’t hear very often,” Tucker said.

Don’t let this moment overwhelm other good car-buying advice, though. Tucker advises that one of the best ways to get a good deal is to buy a vehicle that’s right for you most of the time, even if it doesn’t necessarily meet every possible scenario you can think of. Do you really need a third row of seating if you’ll only use it when company is in town? Do you need a big pickup truck if you’re mostly just hauling yourself to the office?

CNET’s auto expert, Antuan Goodwin, suggests reevaluating your car-buying goals to save money. For example, Goodwin says, instead of a top-tier model, consider a mid-trim level with only the features you truly need. You can also consider low-mileage, pre-owned cars or leasing as alternatives to buying new. 

“If going electric would stretch your budget, exploring combustion alternatives like plug-in or traditional hybrids are good compromises,” Goodwin said. “That’s mostly because I don’t want to dissuade anyone who’s ‘set on going electric’ from doing so, but for someone on the fence, alternatives exist.”

For vehicles placed in service on or after Jan. 1, 2025, and before Oct. 1, 2025 Source: U.S. Department of Energy