EV Tax Credit Guide 2025: The $7,500 Credit Has Expired
The federal EV tax credits ($7,500 new, $4,000 used) expired September 30, 2025 under the One Big Beautiful Bill Act. Guide preserved for historical reference.
By ElectricVsGas
The federal EV tax credit was reshaped more than once since the Inflation Reduction Act passed in August 2022. In 2024, Congress added a point-of-sale transfer option, letting buyers receive the credit directly from their dealer rather than waiting until tax season. Both credits were then terminated by the One Big Beautiful Bill Act (P.L. 119-21, signed July 4, 2025) for vehicles acquired after September 30, 2025.
For current EV buying guidance without the federal credit, see: EV Tax Credit Repealed: What Buyers Need to Know →
The historical mechanics below are preserved for reference — relevant if you claimed the credit in 2024–2025 and are filing your return.
How the Credit Worked (Historical Reference)
The credit was nonrefundable — it reduced your tax liability dollar-for-dollar, but if you owed less than the credit, you didn’t get the difference back as a refund. It lived on Form 8936, “Qualified Plug-in Electric Drive Motor Vehicle Credit,” which you (or your tax preparer) filed with your federal return.
Starting in 2024, dealers enrolled with the IRS could apply the credit directly against the purchase price. The buyer assigned the credit to the dealer, who reduced the out-of-pocket cost immediately and was then reimbursed by the IRS.
New vs. Used Vehicle Credits
| Credit Type | Amount | Vehicle Age |
|---|---|---|
| New EV | Up to $7,500 | New only |
| Used EV | Up to $4,000 | 2+ years old |
The new vehicle credit split into two $3,750 halves: one for meeting North American final assembly requirements, one for battery mineral sourcing. A vehicle had to meet both to earn the full $7,500; if it met only one, the buyer received $3,750.
The used vehicle credit was 30% of the sale price, capped at $4,000. The vehicle had to be at least two model years old and purchased from a dealer (private-party sales didn’t qualify).
Income Limits (Historical Reference)
The IRS used your Modified Adjusted Gross Income (MAGI) from either the current year or the prior year — whichever was lower — providing a small planning window.
New vehicle income caps:
- Single filers: $150,000
- Head of household: $225,000
- Married filing jointly: $300,000
Used vehicle income caps (lower thresholds):
- Single: $75,000
- Head of household: $112,500
- Married filing jointly: $150,000
If you claimed the credit on a 2024 or 2025 return, you could use your prior-year MAGI if it was lower — a useful provision for filers near the income limits.
MSRP Caps (Historical Reference)
Eligible vehicles had to come in under strict MSRP ceilings. “MSRP” meant the manufacturer’s suggested retail price, not the sticker price after dealer markups.
- Vans, SUVs, and pickup trucks: $80,000
- All other passenger vehicles: $55,000
Models that cleared these caps in 2024 included the Chevrolet Equinox EV, Tesla Model 3 (Standard Range), and Ford F-150 Lightning (Standard Range). The Tesla Model S, Rivian R1T, and BMW i7 all exceeded the limits.
Qualifying Vehicles (Historical Reference)
The IRS published an eligibility list at fueleconomy.gov, updated as manufacturers changed battery sourcing agreements. Key rules:
- Final assembly had to occur in North America
- Battery capacity had to be at least 7 kWh
- Vehicle had to be purchased new (or used, for the 25E credit)
How to Claim It: Form 8936 (For 2024–2025 Returns)
If you purchased a qualifying vehicle on or before September 30, 2025, you may still be able to claim the credit on your federal return. File Form 8936 with your return. You’ll need:
- The vehicle’s VIN
- The date of purchase
- The make, model, and year
- Confirmation that you’re the original owner (for new vehicle credits)
Your dealer should have provided IRS Form 15400 at the point of sale, which captures the VIN and credit amount. If you used the point-of-sale transfer option, the credit was already applied — do not claim it again on your return.
State EV Incentives (Still Active in Some States)
Several states maintain their own EV incentives independent of the federal credit. California’s Clean Cars 4 All program offers income-qualifying buyers up to $12,000. New York offers up to $2,000 through the Drive Clean Rebate. New Jersey’s Charge Up rebate pays $1,500 ($4,000 income-qualified). Colorado’s credit stepped down to $750 for 2026 — $3,250 for vehicles under $35,000 MSRP.
State programs have their own income limits, vehicle lists, and funding availability — they can exhaust funding mid-year. Check your state’s energy office website for current terms before purchasing.
The Bottom Line
The federal credit is gone for new purchases in 2026. The operating cost advantage of EVs over gas cars — lower fuel cost per mile, lower maintenance — remains. Whether the math works without the credit depends on your mileage, electricity rate, and state incentives.
Use our calculator to run the full 5-year cost comparison for any EV against its closest gas equivalent, based on your local rates and without the expired federal credit.