The $7,500 EV tax credit under Internal Revenue Code Section 30D was terminated for any new clean vehicle acquired after September 30, 2025, under the One Big Beautiful Bill (Public Law 119-21) signed on July 4, 2025.1Internal Revenue Service. FAQs for Modification of Sections 25C, 25D, 25E, 30C, 30D, 45L, 45W, and 179D Under Public Law 119-21 You can still claim up to $7,500 if you entered a written binding contract and made a payment on a qualifying vehicle on or before that date, even if delivery slipped into a later year. New shoppers who signed after September 30, 2025 get no federal credit at purchase or on their return.
Who Can Still Claim It
The only path to the credit now runs through the binding-contract exception. If you signed a written binding contract to buy a qualifying vehicle and made a payment on or before September 30, 2025, you remain eligible when the vehicle is placed in service, which the IRS defines as the date you take possession.1Internal Revenue Service. FAQs for Modification of Sections 25C, 25D, 25E, 30C, 30D, 45L, 45W, and 179D Under Public Law 119-21 The payment can be nominal. A small down payment or a trade-in counts. So an August 2025 order with a deposit that ships in early 2026 still qualifies, provided the vehicle and buyer meet all the other rules below.
How the $7,500 Is Actually Calculated
The credit is not a flat $7,500. It’s two independent $3,750 halves, and a vehicle earns each half separately based on its battery sourcing.2Internal Revenue Service. Credits for New Clean Vehicles Purchased in 2023 or After
The critical minerals half is worth $3,750 if a sufficient percentage of the battery’s critical minerals were extracted or processed in the United States or in a country with a U.S. free trade agreement, or recycled in North America. For vehicles placed in service in 2026, that threshold is 70 percent.3eCFR. Critical Minerals and Battery Components Requirements
The battery components half is worth another $3,750 if a sufficient percentage of the battery’s components were manufactured or assembled in North America. The 2026 threshold is also 70 percent.4Alternative Fuels Data Center. Electric Vehicle (EV) and Fuel Cell Electric Vehicle (FCEV) Tax Credit
A vehicle that meets only one requirement gets $3,750. A vehicle meeting neither gets nothing. Before you file, verify the exact credit amount for your specific model, trim, and delivery date at fueleconomy.gov, which lists each qualifying vehicle with the amount it supports.
The Foreign Entity of Concern Rule
Starting in 2024 for battery components and 2025 for critical minerals, a vehicle containing materials sourced from a foreign entity of concern (primarily entities tied to China, Russia, North Korea, and Iran) is disqualified from the corresponding $3,750 portion. In practice this knocked many vehicles off the qualifying list. A model that qualified in 2023 may not qualify now, so check the current listing for the year the vehicle was placed in service.
Income Limits
Your modified adjusted gross income has to fall at or below these thresholds:
- Married filing jointly or surviving spouse: $300,000
- Head of household: $225,000
- All other filers: $150,000
Exceed the limit and you cannot claim the credit.5Internal Revenue Service. Topic B – Frequently Asked Questions About Income and Price Limitations for the New Clean Vehicle Credit
You get a useful cushion here. The IRS uses the lesser of your modified AGI for the year the vehicle was placed in service or the year immediately before.2Internal Revenue Service. Credits for New Clean Vehicles Purchased in 2023 or After If your income jumped in the delivery year but was under the limit the year before, you still qualify. That two-year lookback matters most for freelancers, commission earners, and anyone who received a one-time bonus. For most W-2 earners, modified AGI equals the AGI on line 11 of Form 1040.
Vehicle Price and Assembly Rules
The manufacturer’s suggested retail price sets a hard ceiling:
- Vans, SUVs, and pickup trucks: $80,000
- All other vehicles: $55,000
A dollar over the cap disqualifies the vehicle. There’s no partial credit for going slightly above. MSRP for this purpose includes the base price and factory-installed options but not destination charges, dealer add-ons, or taxes and fees. Dealer discounts or markups don’t move the number either.5Internal Revenue Service. Topic B – Frequently Asked Questions About Income and Price Limitations for the New Clean Vehicle Credit
Classification as SUV, truck, or “other” comes from the EPA fuel economy label on the window sticker and the size class listed on fueleconomy.gov. Some crossovers that look like sedans are classed as SUVs, giving them the higher $80,000 cap. Check the listing if you’re unsure.
Final assembly must occur in North America. You can confirm this through the Department of Energy’s VIN decoder at afdc.energy.gov or through NHTSA records. The vehicle must be bought for personal use, not resale, and it must draw significant propulsion from a battery of at least 7 kilowatt hours or qualify as a fuel cell vehicle.6Office of the Law Revision Counsel. 26 USC 30D – Clean Vehicle Credit
Filing for the Credit
File IRS Form 8936, with a separate Schedule A (Form 8936) for each qualifying vehicle, when you submit the federal return for the year you took delivery.7Internal Revenue Service. About Form 8936, Clean Vehicle Credit The form captures the vehicle identification number and your eligibility details, and the IRS applies the credit against your total tax liability.8Internal Revenue Service. How to Claim a Clean Vehicle Tax Credit
If you acquired the vehicle before the September 2025 cutoff and transferred the credit to the dealer at the point of sale, the dealer applied it as a price reduction or down payment, and you got the benefit immediately.9Internal Revenue Service. Topic H – Frequently Asked Questions About Transfer of New Clean Vehicle Credit and Previously Owned Clean Vehicles Credit The dealer should have given you a seller report and IRS confirmation at the time of sale.10Internal Revenue Service. Clean Vehicle Credit Seller or Dealer Requirements Keep those documents. You still must file Form 8936 on your return for the delivery year even if the credit already reduced your purchase price. Many buyers miss this. The filing is required either way.8Internal Revenue Service. How to Claim a Clean Vehicle Tax Credit
Non-Refundable on Your Return, Different at the Dealer
Claimed on a tax return, the credit is non-refundable. It reduces the federal tax you owe down to zero, but any leftover doesn’t come back as a refund and doesn’t carry forward.2Internal Revenue Service. Credits for New Clean Vehicles Purchased in 2023 or After Owe $5,000, and a $7,500 credit erases the $5,000 while the remaining $2,500 is lost. Your actual tax liability caps what you get.
Transfers to the dealer worked differently. The full amount reduced the purchase price regardless of the buyer’s tax liability, and the IRS stated the excess is not subject to recapture from the dealer or the buyer.9Internal Revenue Service. Topic H – Frequently Asked Questions About Transfer of New Clean Vehicle Credit and Previously Owned Clean Vehicles Credit Someone owing only $3,000 in tax could still bank the full $7,500 through a transfer.
One repayment scenario applies either way. If your modified AGI ends up above the income limit for the tax year, you must repay the full credit to the IRS as an addition to your tax when you file, whether the dealer already applied it or not.9Internal Revenue Service. Topic H – Frequently Asked Questions About Transfer of New Clean Vehicle Credit and Previously Owned Clean Vehicles Credit You repay the IRS directly, not the dealer. If your income is near the threshold, the two-year lookback described above is your best tool for staying eligible.
Used and Leased Vehicles
The used clean vehicle credit under Section 25E and the commercial clean vehicle credit under Section 45W, which leasing companies had used to pass savings through to lessees, were both terminated on the same September 30, 2025 date as the new vehicle credit.1Internal Revenue Service. FAQs for Modification of Sections 25C, 25D, 25E, 30C, 30D, 45L, 45W, and 179D Under Public Law 119-21 Before that cutoff, Section 25E offered up to $4,000 (or 30 percent of the sale price, whichever was less) on used EVs priced at $25,000 or below, with a $150,000 joint-filer income cap and a required licensed-dealer sale.11Internal Revenue Service. Used Clean Vehicle Credit Leased EVs did not require the consumer to meet income or MSRP limits because the leasing company claimed the commercial credit and often passed the savings through as a lower monthly payment.12Internal Revenue Service. Commercial Clean Vehicle Credit Both routes are closed for vehicles acquired after the cutoff.
State EV Registration Fees
Federal help is one line item. States are another. At least 41 states now charge an annual registration surcharge on electric vehicles to offset lost gasoline tax revenue, ranging roughly from $50 to $290 per year on top of standard registration. Some states index the fee to inflation or vehicle weight, so it can rise over time. Build these into your total cost of ownership when comparing an EV to a conventional vehicle, especially now that the federal credit is off the table for new purchases.