The federal EV tax credit of up to $7,500 for new vehicles and $4,000 for used vehicles expired for purchases made after September 30, 2025, due to the One Big Beautiful Bill Act (OBBBA) signed in July 2025. While it is not necessarily "forever," it has been repealed with no current plan for a direct federal replacement.
Under the federal One Big Beautiful Bill Act, the $7,500 federal tax credit for new EVs and a $4,000 credit for used EVs expired on September 30, 2025, leaving buyers without a previously significant incentive to purchase these zero-emission vehicles.
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.
Average new EV transaction price is roughly $6,000 higher than gas cars in recent 2025 data. Global average lithium‑ion battery pack prices fell 20% in 2024 alone, to about $115 per kWh. Average prices for 1–5 year‑old used EVs fell about 15% year‑over‑year, far faster than gas cars.
With the passage of the One Big Beautiful Bill in July of 2025, also known as the Working Families Tax Cut, energy tax credits are now set to expire after December 31, 2025.
1 (The “One Big Beautiful Bill” Act), which did not extend Enhanced Premium Tax Credits. As a result, premiums will increase significantly starting on Jan. 1, 2026. What this means is that premium tax credits are still available for 2026, but many people could receive less than they did before.
If the individual tax cuts expire, taxpayers in all income groups would face higher and more complicated taxes. Machinery and equipment expensing is a key provision that, if allowed to expire, would especially harm capital-intensive industries like manufacturing.
Trump signed legislation last year eliminating a $7,500 EV tax credit, rescinding California's EV rules and cancelling penalties for automakers not meeting fuel efficiency requirements.
Yes, EVs tend to depreciate more quickly than ICE vehicles, but this gap is closing, and is set to match their depreciation level over time. There are several factors which contribute to this depreciation which will be outlined throughout this guide.
For homeowners, the 30% federal solar tax credit (Residential Clean Energy Credit) ends after December 31, 2025, meaning systems installed in 2026 won't get this benefit, increasing upfront costs; however, commercial projects and third-party-owned residential systems (leases/PPAs) still qualify for a different, though phasing, credit (Section 48E) through 2027/2028, and state/local incentives remain crucial.
Qualifying for an IRS used EV tax credit
You can claim the credit once every three years. Your modified AGI must be less than $150,000 (for Married Filing Jointly and Qualifying Surviving Spouse filers), $112,500 (for Head of Household filers), or $75,000 for all other filers.
You won't be forced to buy an electric car (EV) overnight, but government regulations (like the EPA's emissions rules) and state mandates (like California's 2035 ban on new gas car sales) are pushing automakers to sell more EVs, effectively making them the primary new vehicle option in many places by the 2030s, though this is subject to political and industry changes, with debates ongoing about consumer choice and affordability.
But the end is in sight, as the government has declared that sales of petrol and diesel cars will end in 2030. Some car industry observers think this is ambitious, but either way, in a few years, there won't be many diesel cars on sale. They will survive beyond that, but by 2050, they could well be a rarity.
The ban on sales of new diesel and petrol models is due to come into place in 2030. As part of the government's recent changes, full hybrid and plug-in hybrid models will be permitted to stay on sale until 2035.
However, a recent AAA survey showed that EV interest in the United States is at its lowest point since 2019—the data showed that only 16 percent of Americans reported being “likely” or “very likely” to purchase an EV as their next car.
As EVs get older, the batteries progressively degrade. It is expected that at around 75% of the battery's original capacity, it has reached the end of its life in an EV. In reality what this means is that if the car was sold with 400 km driving range, at the end of its useful life it could be down to around 300 km.
No Tax on Overtime is a provision that was included in a larger tax reform bill that passed in July 2025. It allows certain workers to deduct up to $12,500 in qualified overtime compensation from their taxable income on their federal income tax return. Joint filers can deduct up to $25,000.
The IRS in October released new federal income tax brackets for 2026. The inflation-based change increased the income ranges for the two lowest tax brackets by about 4%, and the higher ones by roughly 2.3% compared to 2025.
High-Income Taxpayers Paid the Majority of Federal Income Taxes. In 2022, the bottom half of taxpayers earned 11.5 percent of total AGI and paid 3 percent of all federal individual income taxes. The top 1 percent earned 22.4 percent of total AGI and paid 40.4 percent of all federal income taxes.