On July 4th, President Trump enacted a law that scrapped the electric vehicle (EV) tax credits initiated during Biden’s administration. This includes a $7,500 credit for new qualified EVs and a $4,000 credit for used ones.
The tax credits were intended to last until 2032, but Trump’s action ended that possibility. While credits are still available, you have to act quickly, as they will expire on September 30th.
Who qualifies for the credits?
Credits for clean vehicles are specific to certain buyers and vehicle models.
If your adjusted gross income (AGI) doesn’t exceed $300,000 for couples filing jointly, $225,000 for heads of households, or $150,000 for single filers, you’re eligible for a credit.
Up to twenty vehicle models qualify, including some Tesla models and the popular Ford F-150 Lightning. Notably, some vehicle trims might not qualify for the credits. You can find a list of eligible new and used EVs.
- The vehicle must have an MSRP of less than $80,000 for pickups and SUVs, or under $55,000 for other vehicles.
- At least half of the battery minerals and components should come from the U.S. or countries with free trade agreements with the U.S.
- Total weight ratings must be under 14,000 pounds.
- A minimum battery capacity of 7 kilowatt hours is required.
If your vehicle only meets one of its battery composition requirements, a $3,500 tax credit may still apply.
Used EV credits are available for 142 second-hand vehicles. To qualify, the vehicle must be purchased from a dealer, priced under $25,000, and at least two years old.
For buyers of used EVs, income limits are set at $75,000 for single filers, $112,500 for heads of households, and $150,000 for couples filing jointly.
For additional details about clean vehicle credits, the U.S. Department of Energy offers comprehensive information.
Thinking about a purchase?
If you’re certain about wanting an EV and meet the credit criteria, it might be wise to make a purchase before September 30th. There are plenty of attractive options available—including sedans, SUVs, and trucks.
But, if you’re unsure, maybe it’s better to hold off. Chris Hart, a senior policy analyst, suggests rushing into a purchase isn’t advisable if you’re not ready for the shift to owning and charging an EV.
Waiting could also yield a better deal. Analysts indicate that automakers may find ways to lower EV prices.
Joseph Yoon, an insight analyst, is concerned about the influence of Trump’s tariffs, which could inflate some EV prices by over 25%.
Incentives and rebates are seen as adaptable methods for adjusting prices according to demand. Some buyers may perceive considerable savings, especially those who miss out on substantial credits.
It’s worth noting that while the upfront costs for EVs can be higher, they’re typically cheaper to maintain and operate than traditional gas vehicles, potentially balancing out costs in the long run.
Matthew Phillips, CEO of Car Pros Automotive Group, stated that dealers are striving to remain competitive, with demand expected to decline after September.
He also mentioned that some manufacturers are not backing down on EVs and are already offering substantial rebates.
In June, the average incentive for purchasing an EV reached a record 14.8% of the average trade-in price, translating to nearly $8,500.
According to Consumer Reports, incentives for models like the Nissan Leaf, Nissan Ariya, and Volkswagen ID.4 were around 26% in July, while the Kia Niro Electric provided a 21% discount.
This month, many major manufacturers are offering zero percent financing on various electric models, including those from Chevrolet, Ford, GMC, Honda, and Tesla.
Before committing to an EV, it’s advisable to check with your local utility if they provide any credits or incentives for purchasing a vehicle or installing a home charger.
The EV market is not doomed
Following the expiration of the tax credit, demand for EVs is expected to dip. GM CEO Mary Barra noted that the $7,500 incentive significantly boosts demand, and its absence could slow sales.
In the short term, manufacturers may produce fewer electric vehicles, and some slower-selling models could be discontinued. Regardless, substantial investments have been made in EV technology, with the industry recognizing its future relies on electric vehicles. Sales of EVs are predicted to reach 25% of the global market this year.
Cox Automotive has lowered its expectations for new EV sales in 2025 to an 8.5% share of total vehicle sales, down from 10%.
While challenges may lie ahead, there’s a prevailing optimism about EVs. Hart from Consumer Reports remarked that production costs for these vehicles are decreasing over time, suggesting that better and more affordable electric cars will emerge over the next few years.
Details from checkbook.org, a non-profit aiding consumers in securing fair service and prices through unbiased ratings and advice, can be explored on their website.
