Is There Still a Tax Credit for Buying a New Car?

There is no federal tax credit for buying a new car in 2026. The clean vehicle credit under Section 30D of the Internal Revenue Code was terminated for any vehicle acquired after September 30, 2025, under the One Big Beautiful Bill Act signed into law on July 4, 2025.¹ A narrow exception exists: buyers who signed a binding written contract and made a payment on or before that date can still claim the credit when they file, even if delivery came later.

What the Law Changed

Section 30D, created by the Inflation Reduction Act in 2022, offered up to $7,500 toward a qualifying plug-in electric or fuel cell vehicle. The One Big Beautiful Bill Act pulled the plug on three vehicle credits at once: the new clean vehicle credit (Section 30D), the previously owned clean vehicle credit (Section 25E), and the qualified commercial clean vehicle credit (Section 45W). All three are unavailable for vehicles acquired after September 30, 2025.¹

“Acquired” here has a specific meaning. It requires a binding written contract and a payment. A nominal down payment or a vehicle trade-in counts as a payment.² If you walk into a dealership in 2026 without a pre-cutoff contract in hand, no amount of battery capacity or sticker-price negotiation will produce a federal credit on your return.

The Pre-October 2025 Contract Exception

If you signed a binding contract and made a payment on or before September 30, 2025, the credit survives even if the vehicle was delivered afterward. You claim it for the tax year the vehicle was placed in service, meaning the year you actually took possession. A vehicle contracted for in September 2025 but delivered in January 2026 would be claimed on your 2026 return.²

Hold onto two documents. First, your purchase contract, showing the signing date and the payment. Second, the time-of-sale report the dealer submitted through the IRS Energy Credits Online portal. You need both to file, and the seller report is what tells the IRS the vehicle passed its real-time eligibility check.³

How Much Is the Credit Worth

The maximum is $7,500, split into two $3,750 halves. One half depends on where the critical minerals in the battery were sourced. The other depends on where the battery components were manufactured. A vehicle can qualify for one half, both, or neither.

For vehicles placed in service during 2026, at least 70 percent of the value of the battery’s critical minerals must have been extracted or processed in the United States or a country with a free trade agreement, and 70 percent of battery components must have been manufactured or assembled in North America.⁴ The vehicle cannot contain battery components made by a foreign entity of concern, and it cannot contain critical minerals extracted, processed, or recycled by one.⁵

The credit is nonrefundable when claimed on a return. If you owe $5,000 in federal taxes and qualify for a $7,500 credit, you get $5,000 and lose the remaining $2,500. There is no carry-forward.⁶

Who and What Qualifies

The vehicle must be plug-in electric or fuel cell, with a battery capacity of at least seven kilowatt hours, four wheels, primary use on public roads, and a gross vehicle weight rating under 14,000 pounds. Final assembly must have taken place in North America. The window sticker shows the assembly point, the VIN, and battery capacity.⁷

MSRP Caps

Manufacturer’s suggested retail price cannot exceed:

$80,000 for vans, SUVs, and pickup trucks
$55,000 for all other vehicles

Classification follows the fuel economy label. If FuelEconomy.gov lists the vehicle as an SUV, pickup, or van, the $80,000 cap applies. A vehicle priced above its cap is ineligible no matter how well it scores on battery sourcing.⁸

Income Limits

Your modified adjusted gross income must fall at or below:

$300,000 for married filing jointly or surviving spouse
$225,000 for head of household
$150,000 for all other filers

You can use your income from either the year the vehicle was placed in service or the prior year, whichever is lower. Exceed the threshold in both years and the credit is gone. There is no phase-out.⁷

How to Claim It

The dealer must be IRS-registered and must have submitted a seller report through the Energy Credits Online portal, containing the VIN, your taxpayer identification number, and sale details. Without that report, the vehicle is not eligible for any credit.³

If you did not transfer the credit to the dealer at the point of sale, claim it by filing Form 8936 (Clean Vehicle Credits) along with Schedule A (Form 8936) for the year the vehicle was placed in service. The form requires the VIN and calculates the allowable credit based on battery sourcing. The data must match the seller report.⁹

If You Transferred the Credit at the Dealership

If your vehicle was placed in service before the credit terminated and you transferred the credit to the dealer, that dealer applied the credit as an immediate reduction, whether as a down payment or a lower sale price. You still must file Form 8936 for the year the vehicle was placed in service, even though the discount already happened.¹⁰

There is a catch. If it turns out you did not qualify, most often because your income exceeded the threshold in both eligible years, you must repay the full transferred amount to the IRS as additional tax. You do not repay the dealer. The IRS adds it to your tax bill for the year the vehicle was placed in service.¹¹

Leased Vehicles

During the years the credit was active, leasing offered a workaround for buyers who did not meet the Section 30D income or MSRP rules. The leasing company purchased the vehicle, claimed the Section 45W qualified commercial clean vehicle credit, and passed the savings through as lower monthly payments. That credit also ended for vehicles acquired after September 30, 2025, so new leases signed in 2026 do not carry it.²

The Home Charger Credit Is Still Around, Briefly

The vehicle credits are gone, but one related benefit survives a bit longer. If you install qualified electric vehicle charging equipment at your home and place it in service before July 1, 2026, you may qualify for the alternative fuel vehicle refueling property credit under Section 30C. It does not offset the cost of the car, but it can help with a home charging station.¹

State Programs May Fill Part of the Gap

Some states offer their own rebates, tax credits, or sales tax exemptions for electric vehicle purchases. Amounts and eligibility rules vary widely, and availability depends on whether a given program has been funded. If you are buying an EV in 2026, your state department of revenue or energy office is the place to check, because a state rebate may be the only financial incentive left on the table.

1
Internal Revenue Service. Clean Vehicle Tax Credits
2
Internal Revenue Service. FAQs for Modification of Sections 25C, 25D, 25E, 30C, 30D, 45L, 45W, and 179D Under the One Big Beautiful Bill
3
Internal Revenue Service. Clean Vehicle Credit Seller or Dealer Requirements
4
eCFR. 26 CFR 1.30D-3 – Critical Minerals and Battery Components Requirements
5
eCFR. 26 CFR 1.30D-6 – Foreign Entity of Concern Restriction
6
Internal Revenue Service. Credits for New Clean Vehicles Purchased in 2023 or After
7
Office of the Law Revision Counsel. 26 USC 30D – Clean Vehicle Credit
8
Internal Revenue Service. Topic B – Frequently Asked Questions About Income and Price Limitations for the New Clean Vehicle Credit
9
Internal Revenue Service. About Form 8936, Clean Vehicle Credit
10
Internal Revenue Service. Instructions for Form 8936 (2025)
11
Internal Revenue Service. Topic H – Frequently Asked Questions About Transfer of New Clean Vehicle Credit and Previously Owned Clean Vehicles Credit