The clock is ticking on one of the biggest savings opportunities for electric vehicle buyers. The federal EV tax credit, worth up to $7,500, is set to expire on September 30. But before you panic, here is the good news: the IRS recently gave car shoppers a little extra breathing room.
If you are planning to buy an EV soon, here is what you need to know about the deadline, the wiggle room, and which cars actually qualify.
When does the EV tax credit expire?
The EV tax credit officially ends on September 30, 2025. That means after this date, the $7,500 federal incentive will no longer be available for buyers of new electric vehicles.
This change comes as part of the One Big Beautiful Bill Act, which eliminated the credit as of the end of September. Automakers and EV advocates have warned that this could slow down adoption of electric cars in the United States, especially as interest rates and prices remain high.
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What is the IRS rule for contracts signed before the deadline?
Here is where the leeway comes in. The IRS has said that if you sign a binding contract to buy an EV before September 30, you can still qualify for the tax credit, even if the vehicle is not delivered until later.
There are a couple of important details:
- You must sign a binding contract before September 30.
- You must also make a payment, which can be a downpayment or even a vehicle trade-in.
- You will only get the credit once the car is actually delivered to you.
This rule is especially helpful if the car you want is being shipped from another state or has not yet been manufactured.
Sean Tucker, lead editor of Kelley Blue Book, explained that “the IRS has used this exact same language before, when the rules for claiming the credit changed after the Inflation Reduction Act was passed.” In other words, this is not new territory.
Which vehicles qualify for the EV tax credit?
Not every EV on the market qualifies. To get the credit, the car has to meet several conditions:
- The vehicle must be assembled in North America.
- It must meet certain requirements for battery minerals and components.
- There are price caps depending on the type of vehicle.
- Buyers must meet income limits — under $150,000 for individuals or $300,000 for married couples filing jointly.
Some models that currently qualify include:
- Tesla Model 3 and Model Y
- Chevrolet Bolt and Chevy Blazer EV
- Ford F-150 Lightning
- Chrysler Pacifica plug-in hybrid
- Select Hyundai and Kia EVs
There is also a used EV credit of up to $4,000, available for vehicles at least two years old that cost less than $25,000.
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What about leasing an EV?
If you are not sure about buying, there is another option. Leasing has become a popular way to benefit from the tax credit. Under current rules, the $7,500 incentive can be applied to any leased EV, no matter the buyer’s income, the car’s price, or where it was made.
This has made leasing especially attractive for people who want to lower their monthly payments without dealing with the complicated eligibility rules.
How will the end of the EV tax credit affect car buyers?
Experts say we can expect a rush of buyers before the September deadline, followed by a slowdown. Cox Automotive has already reported a 20% jump in new EV sales and a 40% jump in used EV sales this summer, as buyers move quickly to take advantage of the credit.
Jessica Caldwell, head of insights at Edmunds, says that losing the tax credit is “pretty daunting” for automakers already dealing with tariffs and high interest rates. She also warns that many buyers might not even realize the deadline is approaching: “With so much news going out there around autos, particularly around tariffs, some of this message may be getting lost — and people may find themselves disappointed come fall.”
