The Federal EV Tax Credit Ends Soon: What To Know

The Inflation Reduction Act of 2022 enhanced an existing EV tax credit system, leading to a significant increase in electric vehicle sales over the past two years. While complicated for consumers and manufacturers, the $7,500 incentive helped make EVs more affordable or at least more competitive with traditional options. If you’re on the fence about a new EV, here’s what you need to know. 

Why The EV Tax Credit Is Ending

Tucked into the massive One Big Beautiful Bill legislation was a clause that ended the Federal EV Tax Credit. This means that consumers must purchase and take delivery of a qualifying vehicle by September 30, 2025. 

Consumers can claim up to $7,500 for a new EV or $4,000 for a used EV. As of January 1, 2024, buyers can opt to receive the tax credit as a discount when purchasing a qualifying vehicle. 

There are some eligibility requirements based on household income. Married households filing jointly making over $300,000 don’t qualify for the credit; single households making over $150,000 don’t qualify, either. If you’ve previously used the EV tax credit within the past three years, you can’t claim it again. 

Read More: EVs and Repair Shops: Who Fixes Electric Cars?

Vehicles That Qualify for the EV Tax Credit

While the number of electric vehicles from US manufacturers has grown dramatically in the past five years, surprisingly (or disappointingly) few models qualify for the full $7,500 electric vehicle tax credit. 

Vans, pick-ups, and SUVs over $80,000 don’t qualify, and neither do cars with an MSRP over $55,00. Used EVs must be priced below $25,000 and be at least two years older than the current calendar year. 

There’s a full list of qualifying vehicles organized by make and model available here. 

No EV Tax Credit, No EVs?

Many automotive industry experts anticipate that the end of the EV tax credit will slow the rate of adoption in the US. Without the tax credit, many EV models are less competitive in the marketplace, adding to other barriers, such as the cost of installing an EV charger at home or taking long road trips. That puts the US on a very different path than the rest of the world; global EV sales are accelerating and may reach 20 million units sold in 2025. Sales jumped 24% in June, and while the US may see a small spike in the final months of the tax credit, it may be well behind the curve for several years to come. 

All Things Auto in Traverse City

From EVs to vintage BMWs, Garfield Auto Service Center is your reliable repair shop. We’ve helped keep northern Michigan on the move for over forty years with trustworthy repairs and excellent customer service. Oil changes, tune-ups, brake service, and more; get in touch to schedule an appointment with us today!