EV Tax Credit Eliminated By The Big Beautiful Tax Bill: What You Need to Know Before the Clock Runs Out
The recently passed “Big Beautiful Tax Bill” includes sweeping changes to the tax code, but one provision that caught many by surprise is the elimination of the Electric Vehicle (EV) tax credit—a popular incentive for buyers of new, used, and commercial EVs.
By Michael Ruger, CFP®
Partner and Chief Investment Officer at Greenbush Financial Group
The recently passed “Big Beautiful Tax Bill” includes sweeping changes to the tax code, but one provision that caught many by surprise is the elimination of the Electric Vehicle (EV) tax credit—a popular incentive for buyers of new, used, and commercial EVs.
If you’ve been eyeing a new Tesla, Rivian, or Chevy Bolt and planning on that federal tax credit to sweeten the deal, the window is now closing faster than you might expect. Let’s break down what’s changing, when it changes, and what smart tax planning looks like from here.
What’s Changing: EV Credit Ends September 30, 2025
The new tax legislation repeals the federal EV tax credit for all categories of eligible vehicles—new, used, and commercial EVs—effective September 30, 2025.
Here are the key points:
Credits remain available through 9/30/2025 for qualifying vehicles that meet the current rules (including final assembly and battery sourcing requirements).
Starting October 1, 2025, no EV tax credits will be available—regardless of the manufacturer, price point, or battery configuration.
There is no phaseout, no new tiered system—it’s just gone.
This change has huge implications not just for consumers, but for dealers, automakers, and fleet operators who had integrated the credit into pricing, marketing, and adoption strategies.
Reminder: It’s a One-and-Done Tax Credit
One of the most misunderstood parts of the EV tax credit is how it actually works on your tax return. This isn’t a rebate or a refund check from the government—it’s a non-refundable tax credit, which means:
It can only be used once per taxpayer (for a qualifying new or used EV).
You only receive the portion of the credit that offsets your federal tax liability.
If your total tax due is less than the credit amount (e.g., $5,000 tax liability with a $7,500 credit), the excess is lost—you don’t get a refund or carryforward.
For this reason, tax planning is critical. You want to time the EV purchase in a year where you have enough tax liability to fully absorb the credit.
We break this concept down in greater detail in our dedicated article:
$7,500 EV Tax Credit: Use It or Lose It
What You Should Do Now
If you were planning to purchase an EV and benefit from the tax credit, here are a few action steps to consider:
1. Make Your Purchase Before the Deadline
To qualify, your EV purchase must be completed on or before September 30, 2025. If you’re ordering a vehicle with a long wait time, make sure delivery and documentation are completed by that deadline.
2. Coordinate With Your 2025 Tax Liability
Work with your tax advisor to project your 2025 tax liability. If it's too low to fully use the credit, you may want to consider:
Accelerating income into 2025
Deferring deductions
Selling appreciated assets that create short-term capital gains
IRA distributions or a Roth conversion
Why Is It Being Eliminated?
Supporters of the repeal argue that the EV market has matured, manufacturers have regained pricing power, and incentives are no longer needed to drive adoption. Others see it as a budgetary trade-off in the Big Beautiful Tax Bill designed to extend tax relief elsewhere (like the higher SALT cap and increased estate tax exemption).
Regardless of your view, the elimination is now law—and proactive planning is the only way to ensure you don’t leave money on the table.
Final Thoughts
The repeal of the EV tax credit may not be front-page news, but for taxpayers and businesses considering electric vehicle purchases, it’s a deadline worth tracking. If an EV is on your radar for 2025, your timing and tax planning just became far more important.
About Michael……...
Hi, I’m Michael Ruger. I’m the managing partner of Greenbush Financial Group and the creator of the nationally recognized Money Smart Board blog . I created the blog because there are a lot of events in life that require important financial decisions. The goal is to help our readers avoid big financial missteps, discover financial solutions that they were not aware of, and to optimize their financial future.
Frequently Asked Questions (FAQs):
When does the federal EV tax credit end?
The Big Beautiful Tax Bill eliminates the federal electric vehicle (EV) tax credit for new, used, and commercial EVs effective September 30, 2025. Purchases completed before that date may still qualify under current IRS rules.
Does the repeal apply to all types of EVs?
Yes. Beginning October 1, 2025, no EVs—regardless of manufacturer, price, or battery type—will be eligible for a federal tax credit. This repeal applies across the board with no phaseout or grandfathering period.
How does the EV tax credit work before the repeal?
The EV credit is a non-refundable tax credit, not a rebate. It reduces your federal income tax liability dollar-for-dollar, but only up to the amount you owe. Any unused portion is lost—you cannot carry it forward or receive it as a refund.
Can I still claim the EV tax credit in 2025?
Yes, if your qualifying vehicle is purchased and placed in service on or before September 30, 2025. To ensure eligibility, buyers should verify that final assembly, delivery, and paperwork are completed by that date.
Who benefits most from claiming the EV tax credit before it ends?
Taxpayers with sufficient federal tax liability to fully absorb the credit—often those with moderate to high income—benefit the most. Buyers with little or no tax liability may not receive the full $7,500 value.
How can I make sure I get the full EV credit?
Coordinate your purchase with your 2025 tax planning. If your expected tax bill is lower than the credit, consider strategies such as accelerating income, realizing capital gains, or completing a Roth conversion to increase your 2025 taxable income.
Why is the EV tax credit being repealed?
Lawmakers argued that the EV market has matured and that incentives are no longer needed to sustain demand. Others viewed the repeal as a budgetary offset to fund other tax relief measures, including a higher SALT cap and estate tax exemption.
What should EV buyers do now?
If you’re planning to buy an EV, act early to ensure delivery before the September 30, 2025 cutoff. Work with your tax advisor to evaluate your eligibility and confirm that you can maximize the credit before it disappears.
