The federal $7,500 EV tax credit ended for any vehicle acquired after September 30, 2025. The One, Big, Beautiful Bill Act, signed on July 4, 2025, cut short a credit that had been scheduled to run through 2032.1Internal Revenue Service. One, Big, Beautiful Bill Provisions If you’re buying, leasing, or shopping for a used electric vehicle in 2026, no federal credit is available. The only people who can still claim it are those who locked in a qualifying purchase before the cutoff and haven’t yet filed their 2025 return.
Who Still Qualifies After the Cutoff
Everything turns on the word “acquired.” The IRS treats a vehicle as acquired on the date you signed a written binding contract and made a payment. The payment can be small. A nominal down payment counts. A vehicle trade-in counts. If both pieces were in place on or before September 30, 2025, you keep the credit even if the vehicle isn’t delivered until 2026 or later.2Internal Revenue Service. FAQs for Modification of Sections 25C, 25D, 25E, 30C, 30D, 45L, 45W, and 179D Under Public Law 119-21
A backorder doesn’t cost you the credit. A refundable deposit or a non-binding reservation probably does. The IRS asks for a signed purchase agreement, not an expression of interest. If you’re unsure what you signed, dig up the paperwork before you file.
Public Law 119-21 amended Section 30D’s termination clause, replacing “placed in service after December 31, 2032” with “acquired after September 30, 2025.”3Office of the Law Revision Counsel. 26 USC 30D – Clean Vehicle Credit The same cutoff applies to the used clean vehicle credit under Section 25E and the commercial clean vehicle credit under Section 45W, which had been the mechanism behind most lease incentives.2Internal Revenue Service. FAQs for Modification of Sections 25C, 25D, 25E, 30C, 30D, 45L, 45W, and 179D Under Public Law 119-21 All three ended together.
How to Claim the Credit on Your 2025 Return
If you qualify under the transition rules, you claim the credit by filing Form 8936, Clean Vehicle Credits, with your 2025 federal return. You’ll need the time-of-sale report the dealer generated when you bought the vehicle. Without that report, the credit can’t be substantiated.
How you took the credit changes what happens on the return. If you claimed it as a non-refundable credit against your tax liability, it reduces what you owe by up to $7,500. It won’t generate a refund beyond your tax bill, and any unused portion doesn’t carry to next year.
If you transferred the credit to the dealer at the point of sale and took it as an upfront discount, the advance payment isn’t taxable income, but it does reduce the vehicle’s cost basis, and you still have to report the transaction on Form 8936.4Internal Revenue Service. Frequently Asked Questions About Transfer of New Clean Vehicle Credit and Previously Owned Clean Vehicles Credit
The Repayment Trap for Point-of-Sale Transfers
This is where filers get caught. The dealer discount was an advance based on your expected eligibility. If your actual 2025 income exceeded the limits, the IRS treats the advance as an overpayment and adds it back to your tax bill.4Internal Revenue Service. Frequently Asked Questions About Transfer of New Clean Vehicle Credit and Previously Owned Clean Vehicles Credit The rule allowed you to qualify using either the year of delivery or the prior year, whichever was lower. Buyers who used prior-year income were safest because that number was already known. Buyers who used a current-year estimate and then earned more than expected may owe the full credit back.
Income and Price Limits That Still Govern 2025 Claims
The Inflation Reduction Act eligibility rules apply to any credit claimed for a pre-cutoff purchase. Modified adjusted gross income had to fall below:
- $300,000 for married couples filing jointly
- $225,000 for head of household filers
- $150,000 for all other filers
You could use the lower of your delivery-year or prior-year income.5Internal Revenue Service. Topic B – Frequently Asked Questions About Income and Price Limitations for the New Clean Vehicle Credit Exceed the threshold in both years and the credit is lost.
The vehicle’s manufacturer’s suggested retail price also had to stay under a cap: $80,000 for vans, SUVs, and pickup trucks, or $55,000 for sedans and other vehicles. The cap covered base price and factory-installed options but excluded destination charges and dealer add-ons.6Internal Revenue Service. Credits for New Clean Vehicles Purchased in 2023 or After
Whether You Get $3,750 or the Full $7,500
The credit was built in two halves. Each half depended on separate battery-sourcing rules, and a vehicle that met one but not the other qualified for $3,750.
The first $3,750 required a percentage of the battery’s critical minerals to be extracted or processed in the United States or a free trade agreement country. For 2025, that threshold was 60%.7U.S. Department of the Treasury. Treasury Releases Proposed Guidance on New Clean Vehicle Credit
The second $3,750 required a percentage of battery components to be manufactured or assembled in North America. For vehicles placed in service in 2025, that threshold was also 60%.8Internal Revenue Service. Clean Vehicle Credits Under Sections 25E and 30D
Separately, a vehicle was disqualified entirely if its battery contained components or, starting in 2025, critical minerals sourced from a foreign entity of concern (companies owned or controlled by China, Russia, North Korea, or Iran).9Department of Energy. DOE Releases Final Interpretive Guidance on the Definition of Foreign Entity of Concern A single non-compliant part voided the full credit regardless of the percentage math.
Used EVs and Leases
Both ended on the same day. Before September 30, 2025, the used clean vehicle credit was worth 30% of the sale price, capped at $4,000, on qualifying vehicles bought from a licensed dealer for $25,000 or less. Income limits were tighter: $150,000 for joint filers, $112,500 for heads of household, and $75,000 for everyone else, and the vehicle had to be at least two model years old.10Internal Revenue Service. Used Clean Vehicle Credit If you bought a qualifying used EV before the cutoff and haven’t filed, you can still claim it.
Leases relied on a different mechanism. Under Section 45W, the dealer as legal owner claimed the commercial clean vehicle credit and typically passed the benefit through as a reduced monthly payment. The strict sourcing rules that applied to purchases didn’t apply here, which is why leasing became the standard workaround for vehicles that couldn’t meet the battery requirements. Section 45W terminated on September 30, 2025 as well, and the IRS closed new dealer registration for the Energy Credits Online portal that same day. Lease deals signed after the cutoff carry no federal incentive.
State Programs That Still Offer EV Incentives
Several states run their own programs independent of the federal credit. Colorado’s state credit dropped to $3,250 for 2026 purchases. Massachusetts offers rebates between $3,500 and $6,000. New Jersey provides up to $4,000 for new battery-electric vehicles. Illinois has a rebate worth up to $4,000, with the amount set to decrease after mid-2026. Maryland, New York, Pennsylvania, and Kansas run programs ranging from $1,500 to $4,000.
Each state sets its own income limits, vehicle price caps, and paperwork. Some run on capped appropriations that empty before the fiscal year ends, so timing matters. Check your state energy office or department of revenue directly before counting on a particular amount, since these programs shift often and the figures above may change during 2026.