Electric vehicle purchases have long been eligible for a federal tax credit of up to $7,500. That is changing on Sept. 30 thanks to the One Big Beautiful Bill Act, which eliminated the credit.
However, the IRS is offering some relief, giving taxpayers some leeway on the end of the credit. Consumers who enter a binding contract to purchase an electric vehicle before Sept. 30 may still be eligible for the credit, even if the vehicle isn’t delivered until after that date.
This poses the question: What does this mean for electric vehicle purchases, and can you still qualify? We’ll dig into this question and what to expect going forward.
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The electric vehicle tax credit is set to expire on Sept. 30, due to provisions in the One Big Beautiful Bill Act. The bill eliminates the $7,500 credit for new electric vehicle purchases and the $4,000 credit for used electric vehicles worth up to $4,000.
These tax credits have been a boon to electric vehicle customers, as they significantly reduced purchasing costs, especially for new vehicles. Economists project that electric vehicle demand could drop by as much as 27% without the $7,500 credit, Bloomberg reported.
The IRS has slightly modified the rules surrounding electric vehicle purchases, allowing buyers some additional time to claim the credit. Specifically, it says that the vehicle must be “acquired” as of the date of a written binding contract, and a payment has been made. The payment can be made as a cash down payment or via a vehicle trade-in.
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Although the One Big Beautiful Act will eliminate the electric vehicle tax credit, the rule change aligns with language in the Inflation Reduction Act. For instance, the IRS has used vehicle delivery dates to determine tax credits in the past, NPR reported.
The ability to use the contract date instead of the delivery date is helpful for buyers of vehicles that can have delayed deliveries, such as Tesla.
Time is running out to claim the electric vehicle tax credit, and buyers should be aware of the rules around it to avoid missing the deadline. For instance, purchase price limits exist for the tax credit, Kiplinger reported. Vans, SUVs, and trucks with purchase prices exceeding $80,000 are not eligible.
