Electric Vehicle (EV) Credits Set to Expire Sept 30, 2025

If you want to use the federal tax credit when buying a new electric (EV) or PHEV (plug-in hybrid) vehicle, you should act now as you must purchase and take delivery of a qualifying EV before 9/30/25.  Note that the "final assembly" of the vehicle must have occurred in North America to be eligible for any credits.  If the vehicle passes this test, you may be eligible for two $3,750 electric car tax credits that add up to $7,500 if you meet all the criteria.

To be eligible for the $7,500 credit for a new EV or PHEV:

1. A certain percentage of the vehicle's critical battery minerals must have been sourced from the U.S. or from any country that has a free-trade agreement with the U.S. to get the first $3,750 credit.

2. A certain percentage of battery components must be manufactured or assembled in the same roster of countries to get the second $3,750 credit.

3.  The eligibility cap on the manufacturer's suggested retail price of the vehicle is $55,000 for cars and $80,000 for SUVs, trucks and vans.

4. The buyer's income is subject to limits between $150,000 and $300,000 depending on tax filing status.

5. If either amount from #3 or #4 is too high, the buyer will not qualify for any federal EV tax credits.

If you are buying a used EV or PHEV, you do not have to worry about where the car was assembled or where its battery components came from.

To be eligible for a $4,000 tax credit for a used  EV or PHEV:

1. The buyer's income is subject to limits between $75,000 to $150,000 depending on tax filing status.

2. The vehicle itself must be at least two model years older than the calendar year in which it was purchased, and cost no more than $25,000.

3. The vehicle must be purchased from a dealer, not a private party.

4. The used EV tax credit applies only once in the vehicle's lifetime. Subsequent owners are not eligible.

5. Once a buyer has taken the used EV tax credit, the buyer is not eligible for another federal EV tax credit for another three years.

6. The vehicle must be for personal use and "not for resale."

7. Only an individual may claim the used EV tax credit.  Businesses are excluded.

If you are interested in leasing a new EV or PHEV, you should check with the dealer as typically the originator of the lease (usually the automaker's finance division) can take the credit.  It is then up to each automaker to decide if they want to pass these savings along in the form of more affordable leases.  Since you are not the one getting the tax credit in this case, your income is irrelevant.

New vehicles that qualify for the 2025 EV tax credit: https://www.edmunds.com/fuel-economy/the-ins-and-outs-of-electric-vehicle-tax-credits.html#header1