To qualify for the federal EV tax credit, your Modified Adjusted Gross Income (MAGI) must be $300,000 or less for joint filers, $225,000 for heads of household, and $150,000 for single filers. The vehicle must be new (or used with specific constraints), pass battery capacity/assembly tests, and be purchased from a qualified dealer who reports the sale to the IRS.
Visit the FuelEconomy.gov Tax Center to determine whether a vehicle qualifies for a tax credit, navigate eligibility requirements, and read frequently asked questions. You can also use the tax credit calculator to determine how much you can claim on a used vehicle.
Unchanged for 2025 are the limits on how well off you can be to still claim the new-car credit. To qualify, your household income (the “adjusted gross income” on line 11 of your tax return, IRS Form 1040) must be no more than $300,000 for joint filers, $225,000 for heads of households and $150,000 for individuals.
To qualify for a tax credit of up to $7,500, a new EV or an eligible plug-in hybrid electric vehicle (PHEV) must have met certain rules: A vehicle's MSRP must not have exceeded certain limits, so pricey EVs like the GMC Hummer EV, Lucid Air, and Tesla Model S didn't qualify.
For vehicles acquired on or before Sept. 30, 2025, if you buy a qualified used electric vehicle (EV) or fuel cell vehicle (FCV) from a licensed dealer for $25,000 or less, you may be eligible for a used clean vehicle tax credit.
Expect a very different landscape. Many manufacturers are already planning their post-credit strategies—which, especially with EV sales volumes already down earlier this year, will likely include price cuts, according to Ivan Drury, director of insights at car buying site Edmunds.
The tax credit, passed by the Biden administration in 2022 to support EVs, is going away Wednesday as part of President Donald Trump's broad spending and tax bill.
To qualify for the credit, you must enter into a binding written purchase agreement and make a car payment on or before September 30, 2025. You should claim the credit on your 2025 tax return filed in 2026. The EV tax credit is non-refundable, so you won't get a refund for the unused portion of it.
Many used Teslas retain their advanced technology and features, making them a great value. Additionally, purchasing a used Tesla may allow you to access models that are no longer in production, such as older versions of the Model X or Model 3.
The new tax bill will end the $7500 tax credit on new EVs and the $4000 tax credit on used EVs.
The $7,500 Tax Credit Ends September 30
Delivery can happen later, and you may still claim the credit, especially if you obtain a "time of sale" report from your dealer, which documents the sale date. The IRS has confirmed this loophole can extend eligibility even into early 2026.
When does the Electric Vehicle Credit end? The Electric Vehicle Credits effectively ends on Sept. 30, 2025. That means if you purchase a qualifying vehicle before that date, these credits will still be available to you (see list below for credit details).
Eligible shoppers may “transfer” the full value of the tax credit to a dealership to use as a point-of-sale discount on a qualifying vehicle. A built-in $4000 rebate or down payment on a used EV is a big incentive! What's the catch? The purchase must go through a dealership that has registered with the IRS.
Pre-owned EVs are a bargain right now and could stay that way for the next couple of years. That's especially true when compared to the new car market. In general, new EVs cost more than comparable gasoline-powered vehicles because of the high cost of their batteries.
Update: The New Clean Vehicle Credit is not available for vehicles acquired after Sept. 30, 2025. The vehicle must be placed in service for you to claim the credit.
Income limits: To qualify, your modified adjusted gross income (MAGI) must not exceed: $300,000 for married couples filing jointly. $225,000 for heads of household. $150,000 for all other filers.
You will not be able to negotiate the price of a new model, but there are still ways to reduce your spending. Watch for Tesla's occasional price adjustments and check the website for inventory or demo vehicles when they are available. Use tax credits and local incentives to reduce your final cost.
While electric cars are less expensive to maintain when compared to ICE cars, they will still need new tires, wheel alignments, and tire rotations. Brakes will need servicing though regenerative braking helps the components to last a lot longer, and you'll still need to eventually replace suspension components.