Is There Still a Federal Tax Credit for Electric Cars?

There is no federal tax credit for electric cars purchased after September 30, 2025. The One, Big, Beautiful Bill, signed into law on July 4, 2025, ended the new clean vehicle credit of up to $7,500, the used clean vehicle credit of up to $4,000, and the commercial clean vehicle credit of up to $40,000 as of that date.¹ If you buy an EV in 2026, you get no federal credit. The narrow exception is for buyers who signed a written binding contract and made a payment before October 1, 2025, even if delivery comes later. A separate home charger credit still exists through June 30, 2026, but only for buyers whose address falls inside specific census tracts.

What Ended on September 30, 2025

Three EV credits under the Internal Revenue Code came out of the Inflation Reduction Act: Section 30D for new clean vehicles, Section 25E for previously owned clean vehicles, and Section 45W for commercial clean vehicles. The One, Big, Beautiful Bill terminated all three for vehicles acquired after September 30, 2025.² There was no gradual phase-down. The credits went from fully available to unavailable on one date.

For a 2026 shopper, this is the whole answer. No sourcing paperwork, income qualification, or dealer workaround creates eligibility for a vehicle bought after the deadline.

The Binding-Contract Exception

If you signed a written binding contract and made a payment on or before September 30, 2025, you can still claim the credit even if the vehicle is delivered in 2026.¹ A payment can be a nominal down payment or a vehicle trade-in. You claim the credit when you place the vehicle in service, meaning when you take possession.

So a buyer who signed a binding purchase agreement and put money down in August 2025, then takes delivery in February 2026, is still eligible. A buyer who finalized the deal in October 2025 is not, regardless of when they first got in line or when the dealer submitted paperwork.

Eligibility Rules That Still Matter

If you are filing a 2025 return for a vehicle you already bought, or claiming the credit in 2026 under the transition rule, the underlying eligibility rules still apply.

New Vehicle Income and Price Limits

For the Section 30D credit worth up to $7,500, modified adjusted gross income could not exceed $300,000 for joint filers, $225,000 for heads of household, or $150,000 for everyone else.³ You could use your income from the year of delivery or the prior year, whichever was lower.⁴

The manufacturer’s suggested retail price had to fall within these caps:

Vans, SUVs, and pickup trucks: $80,000 or less
All other vehicles: $55,000 or less

MSRP for this purpose included manufacturer-installed options but excluded destination charges and dealer add-ons.⁴

Battery and Assembly

The vehicle needed a battery capacity of at least 7 kilowatt-hours, a gross vehicle weight rating under 14,000 pounds, and final assembly in North America.³ The $7,500 was split into two $3,750 halves, one tied to critical mineral sourcing and the other to battery component manufacturing.⁵ A vehicle could hit one half or both. Vehicles with battery components from a “foreign entity of concern” were disqualified outright, which is why the qualifying list was always short.

Used Vehicle Credit

The Section 25E credit was the lesser of $4,000 or 30% of the sale price, capped at a $25,000 sale price.⁶ The vehicle had to be at least two model years old, and the sale had to go through a licensed dealer. Private-party sales never qualified. Income limits ran lower than for the new credit: $150,000 joint, $112,500 head of household, $75,000 everyone else. The same look-back applied.⁷ A buyer could only claim it once every three years, and only the first qualified resale of a given vehicle counted.

The Leasing Angle

When you leased an EV, the leasing company was the buyer and could claim the Section 45W commercial credit, which did not carry the battery sourcing or assembly restrictions that disqualified many vehicles from the consumer credit. Dealers often passed part of that savings to lessees through lower monthly payments. Section 45W also ended for vehicles acquired after September 30, 2025.¹ Leasing companies working through pre-cutoff inventory may still be pricing off it.

How to Claim It

Since 2024, buyers could transfer the credit to the dealership at the time of sale, reducing the vehicle’s price immediately instead of waiting for a tax refund.⁸ This mattered because the credit was nonrefundable on a return. If your federal tax liability was $4,000 and the credit was $7,500, the extra $3,500 was lost. Transferring solved that: the dealer got the full amount from the IRS regardless of your tax situation.

To transfer, you gave the dealer a taxpayer ID number, a government-issued photo ID, and an attestation that your income fell below the applicable threshold. The dealer submitted the transaction through the IRS Energy Credits Online portal.⁹ If the IRS rejected the seller report, no credit was available to anyone.⁸

Whether or not you transferred, file Form 8936 with your federal return for the year the vehicle was placed in service. Watch for one trap. If you transferred the credit at the dealership and your income for both the delivery year and the prior year turns out to exceed the limit, you owe the full transferred amount back when you file.¹⁰ Dealers did not verify income. The repayment falls on the buyer.

Keep a copy of the accepted seller report with your tax records. It carries the vehicle identification number, sale date, sale price, battery capacity, and your taxpayer identification number, and the credit is not valid until the IRS accepts it.⁹

Home Charger Credit Through June 2026

One EV-related federal credit survives briefly. The Section 30C credit for alternative fuel vehicle refueling property covers 30% of the cost of a qualified home charger, up to $1,000 for personal use.¹¹ The charger must be placed in service by June 30, 2026.

The location restriction disqualifies many homeowners. Your principal residence must sit in either a low-income community census tract or a non-urban census tract.¹² Suburban and urban addresses outside those categories are not eligible. The IRS provides a lookup tool to check an address.

What’s Left: State Incentives and EV Fees

With the federal purchase credits gone, state and local programs are now the main source of buyer savings. Programs vary widely. Some states offer rebates or tax credits worth several thousand dollars, while more than 30 states offer nothing. Several programs that did exist have run out of funding. Check your state’s energy office or department of revenue, because these programs change often and budgets can be exhausted mid-year.

Around 30 states also charge an additional annual registration fee on electric vehicles, typically $50 to $260, meant to offset the gas tax revenue EVs do not generate. It is a recurring cost worth working into the ownership math for any 2026 purchase.

1
Internal Revenue Service. FAQs for Modification of Sections 25C, 25D, 25E, 30C, 30D, 45L, 45W, and 179D Under the One Big Beautiful Bill
2
Internal Revenue Service. Clean Vehicle Tax Credits
3
Internal Revenue Service. Credits for New Clean Vehicles Purchased in 2023 or After
4
Internal Revenue Service. Topic B – Frequently Asked Questions About Income and Price Limitations for the New Clean Vehicle Credit
5
Federal Register. Clean Vehicle Credits Under Sections 25E and 30D; Transfer of Credits; Critical Minerals and Battery Components; Foreign Entities of Concern
6
Office of the Law Revision Counsel. 26 USC 25E – Previously-Owned Clean Vehicles
7
Internal Revenue Service. Used Clean Vehicle Credit
8
Internal Revenue Service. Topic H – Frequently Asked Questions About Transfer of New Clean Vehicle Credit and Previously Owned Clean Vehicles Credit
9
Internal Revenue Service. Clean Vehicle Credit Seller or Dealer Requirements
10
Internal Revenue Service. Instructions for Form 8936
11
Office of the Law Revision Counsel. 26 USC 30C – Alternative Fuel Vehicle Refueling Property Credit
12
Internal Revenue Service. Frequently Asked Questions Regarding Eligible Census Tracts for Purposes of the Alternative Fuel Vehicle Refueling Property Credit Under Section 30C