Understanding 2025 EV Tax Credit Changes
Understanding EV Tax Credits for 2025: What's Changing and Why You Should Act Now
Stay Informed-Save Thousands Before It's Too Late
Intelligence is now integral to making smart vehicle decisions, especially when it comes to electric vehicle tax credits. If you're considering going electric, this year offers a final window to capture valuable federal incentives. Starting July 4, 2025, the One Big Beautiful Bill Act brought sweeping changes that will end the $7,500 credit for new EVs and the $4,000 credit for used EVs as of September 30, 2025. Understanding these updates: what's leaving, what remains, and what might come next, is essential for maximizing savings.
The $7,500 Tax Credit Ends September 30
The federal tax credit of up to $7,500 for qualifying new EVs is set to expire September 30, 2025. Buyers must complete a binding purchase agreement with a down payment before that date. Delivery can happen later, and you may still claim the credit, especially if you obtain a "time of sale" report from your dealer, which documents the sale date. The IRS has confirmed this loophole can extend eligibility even into early 2026. Acting now ensures you don't miss out.
Used EV Credit Ends Too
The credit for pre-owned EVs-30 percent of the sale price up to $4,000-also ends September 30. To qualify, the vehicle must cost less than $25,000, be at least two years old, and be purchased from a dealership. Buyers must meet income limits, typically lower than for new EV credits. This credit was a strong entry point for many first-time EV buyers, but it too will sunset in 2025.
Existing Credit Rules Still Apply-For Now
Even as deadlines approach, the original eligibility rules for EV credits remain in effect. For new EVs, the vehicle must be assembled in North America, meet sourcing criteria for critical minerals and battery components, and fit under MSRP caps-$55,000 for cars, $80,000 for SUVs and trucks. Income limits also apply: $150,000 for single filers, $225,000 for heads of household, and $300,000 for joint filers.
Used EV buyers must meet similar but tighter income caps, and the vehicle must meet age and price thresholds. Each credit-new or used-is limited to one vehicle per taxpayer and requires filing IRS Form 8936. Since January 1, 2024, both credits can be applied at the point of sale-effectively turning them into instant discounts-or claimed later on your tax return.
Why You Must Act Now
With the credits ending September 30 and limited flexibility thereafter, timing is critical. Whether buying or leasing, ensure your purchase is finalized-with contract and down payment-before the deadline. Ask your dealer for a time-of-sale report to document timing, and confirm eligibility before signing.
Report after September 30, and the credit will no longer be available, regardless of delivery date. Experts warn of a likely EV sales contraction once the program ends, reducing pricing pressure and dealer incentives. Acting quickly ensures you benefit from the final round of savings before the market shifts.
What's Leaving, What's Staying
- $7,500 federal credit for new EVs ends September 30, 2025
- $4,000 or 30 percent credit for used EVs ends the same day
- Lease loophole for EVs ends September 30, closing a key pathway for incentive delivery
- Credit rules-assembly location, price cap, income limits-still apply until cutoff
- Time-of-sale application still allowed through September 30
How to Guarantee Your Credit
Here's what you should do next:
- Choose your EV and confirm it meets all eligibility requirements (assembly, sourcing, MSRP)
- Sign a purchase agreement and pay a deposit before September 30
- Obtain a time-of-sale report from the dealer to document eligibility
- Decide whether to apply the credit at purchase or claim it on your tax return via Form 8936
- If leasing, discuss how the expiring loophole may affect upfront savings
Final Thoughts from Honda North
At Honda North, we believe smart EV choices mean pairing innovation with informed action. The approaching EV tax credit deadline makes 2025 your last clear path to substantial federal savings, $7,500 on new EVs or up to $4,000 on used. With the One Big Beautiful Bill closing key incentive streams, now is the time to act before this window closes. Contact our team to walk through qualifying models, available incentives, and help you complete your purchase before the deadline hits. We're here to ensure you navigate these changes with confidence and clarity.
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382 Newbury Street
Danvers, MA 01923
- Sales: 978-539-5059
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