The Inflation Reduction Act provides federal tax incentives for electric vehicles (EVs) through 2032. This applies to both new and pre-owned EVs, including fully electric and plug-in hybrid models. With this tax incentive, buyers can receive up to:

• $7,500 in tax credits for new electric vehicles
• Up to $4,000 for used electric vehicles

Signed into law by President Joe Biden in 2022, the Act also facilitates immediate savings by enabling dealers to offer the tax credit at the point of sale, rather than making consumers wait until tax season.

What Could Happen to the EV Credit in 2025?

The EV tax credit could potentially be phased out in 2025. The new administration, led by President-elect Donald Trump, has announced plans to eliminate the tax credit as part of a broader tax reform. If implemented, this change could impact EV purchases made in early 2025.

However, the final decision will depend on the specifics of the proposed legislation and its enactment. In other words, it’s possible but not certain. There will most likely be opposition from car dealers and other stakeholders, which could influence the outcome.

It’s also possible that some states may provide credits if the federal government eliminates them.

Why Should I Care?

The EV car credit may be eliminated sooner than anticipated. If you are considering the purchase of and EV, you may want to purchase it sooner than later. Keep in mind, the EV credit is subject to income limits, MSRP limits, and manufacturing conditions. 

Resources:
https://home.treasury.gov/policy-issues/inflation-reduction-act