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Unlock EV Tax Benefits Before They Expire: Essential Guide

Critical Deadline Reminder: If the idea of owning an electric vehicle (EV) has sparked your interest—whether for personal use or for expanding your business fleet—now is the moment to act. The expansive federal tax credits allocated for these vehicles will sunset on September 30, 2025. Here’s a detailed breakdown of what this means for you and the actions you need to take.

Understanding the Tax Credit Expiry: Impacts and Insights

Originally part of the One Big Beautiful Bill Act (OBBBA), the EV tax credits slated for continuance through 2032 are now set to expire prematurely by September 30, 2025. This accelerated timeline comes without a phase-out period, grace extension, or grandfather clauses—marking a significant change in the fiscal landscape.

Here’s what you need to know:

  • New EV credit: Potential savings of up to $7,500

  • Used EV credit: Up to $4,000

  • Commercial EV credit: Ranges from $7,500 to $40,000, contingent on vehicle weight

Crucial Milestones: Mastering Acquisition Timing

Eligibility hinges on taking possession of the EV no later than September 30, 2025. Merely having a signed purchase order or a deferred delivery date will not suffice.

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EV Leasing Dynamics have shifted: Historically, leasing offered a "backdoor" via the clean vehicle tax credit, where the benefits were funneled to the manufacturer or dealership, potentially lowering your costs. This opportunity closes post-September 30, affecting both new lease agreements and delivery timelines.

Action Plan for Consumers and Dealers

  • Immediate Steps: For prospective buyers, check the availability and delivery schedules well in advance of the cut-off date.

  • Credit Transfer Options: You might opt to transfer the credit to the dealer at the point of purchase for instant savings or claim it on your tax return with IRS Form 8936.

  • Detailed Eligibility Criteria:

    ○ New EVs should comply with stringent sourcing and assembly criteria; adhere to price ceilings ($55K for cars, $80K for larger vehicles); and meet income thresholds (single: $150K, household head: $225K, couples: $300K).

    ○ Used EVs are required to be at least two years older, sold via a dealer, and priced at $25,000 or less, with the credit capped at $4,000 or 30% of the sale price.

    ○ Commercial EVs, utilized for business purposes, have a credit up to $40,000 depending on weight, without income constraints.

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Broader Market Ramifications and Timing Strategies

Market experts anticipate a surge in EV procurements preceding the deadline, succeeded by a possible sales decline thereafter. A Harvard analysis predicts a 6% reduction in EV uptake by 2030, albeit supporting significant fiscal savings for the government of $169 billion over 10 years. Reference: Reuters

Time-sensitive buyers still have the upper hand to leverage substantial savings—remember, timing is critical.

Essential Summary

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

Final Word: Seize the Opportunity

If an EV is in your future plans, this is the time to get proactive. Secure your orders, confirm your delivery dates, and verify your eligibility for these credits. Consult your tax advisor to ensure your fiscal strategies are sound. Remember, these incentives are fleeting, and they won’t wait.

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