As of October 1, 2025, the federal $7,500 new and $4,000 used EV tax credits have expired, removing a major incentive that previously reduced purchase costs. This shift is expected to slow near-term EV sales growth, with projections suggesting 2030 sales could be 40% lower. Automakers are responding with increased dealer incentives, leasing deals, and price adjustments.
Sales of battery-electric vehicles could be about 40% lower in 2030 without the credits than what we'd see with them, according to one analysis by Princeton University's Zero Lab. Some US states still have their own incentive programs for people looking to buy electric vehicles.
As of September 30, 2025, the federal EV credits have expired. No new credits will be paid out at the time of sale. If you have purchased a qualifying EV but are not in possession of it yet, you may still be eligible. Qualifying sales require a signed agreement and a down payment prior to September 30, 2025.
The federal tax credit of up to $7,500 for qualifying new EVs is set to expire September 30, 2025. Buyers must complete a binding purchase agreement with a down payment before that date.
Yes, in 2024, each parent could gift $18,000 to a child (totaling $36,000 per child for the couple) without tax implications, and for 2025, that amount increased to $19,000 per parent ($38,000 per child) because the annual gift tax exclusion is adjusted for inflation, requiring separate checks for each parent to utilize the full amount, according to TurboTax, Yahoo Finance, Guardian Life, IRS (.gov), and Mercer Advisors.
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.
Congress has passed legislation that terminates both the $7,500 tax credit for new EVs and the $4,000 credit for used EVs on September 30, 2025.
Premium Increases
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.
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.
The new tax bill will end the $7500 tax credit on new EVs and the $4000 tax credit on used EVs.
On Friday, Jan. 9, Newsom unveiled a $200 million plan to offer a new “on‑the‑hood” rebate—an instant discount at the dealership aimed at softening the blow for California drivers and preserving the state's status as the country's EV stronghold.
"Even when the tax incentive goes away, used electric vehicles will likely still cost much less than similar gas-powered vehicles. Because EV technology is developing so quickly, depreciation on used EVs is still high."
Gifted cars, on the other hand, are often subject to a gift tax based on their fair market value. So, in theory, selling a car for $1 could save you a lot of money on taxes. Not in California, though. Along with Florida, California is one of a few states that will waive taxes for car gifts.
How It Works. SDG&E customers can receive up to a $4,000 rebate when purchasing or leasing an eligible pre-owned Battery Electric Vehicle (BEV) or Plug-In Hybrid Electric Vehicle (PHEV). See eligible vehicle list here.
Individuals may not claim more than one pre-owned vehicle tax credit in a three-year period. For more information about claiming the credit, see Internal Revenue Service (IRS) Used Vehicle Credit website and Form 8936, which is available on the IRS Forms and Publications website, and the final rule.
EV sales shrank significantly in Q4. But not every model suffered. Electric vehicle sales in the U.S. fell 36% year-over-year in the fourth quarter of last year. Many of those Q4 purchases happened in Q3 due to the end of the tax credits.
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.
It has now been replaced by Universal Credit or Pension Credit. If you've received a migration notice letter telling you to claim Universal Credit or Pension Credit, read our guide Universal Credit Migration Notice to learn what to do next.
The Electric Vehicle Credit expires on September 30, 2025, meaning purchases made before this date may still qualify for up to $7,500 for new EVs, $4,000 for used EVs, and $40,000 for commercial EVs.