EV Tax Credit Is Ending Soon, but There is Still Time to Act

The federal tax credit for electric vehicles is ending soon, and both business owners and individuals should understand how to take advantage before it is gone.

Key Deadlines and What Changed

• The federal EV tax credit for both new and used vehicles ends on September 30, 2025. After this date, the credit will no longer be available.

• The IRS has clarified that a vehicle counts as “acquired” when you sign a written binding contract and provide a down payment or deposit, even if delivery happens later. This allows buyers to lock in eligibility before the deadline.

Credit Amounts and Eligibility

Vehicle Type	Max Credit	Key Requirements
New EV	Up to $7,500	Income limits apply ($150K–$300K MAGI depending on filing status). Vehicle price caps: up to $55K for cars and $80K for trucks and SUVs. Final assembly and battery sourcing rules apply.
Used EV	Up to $4,000	Must be purchased from a dealer. Vehicle must be at least two years old and cost no more than $25K. Lower income limits apply compared to new EVs.

What Business Owners Should Know

• Fleet purchases: If you are planning to add electric vehicles to your company fleet, contracts signed before Sept 30 will qualify for the credit even if delivery occurs later.

• Depreciation benefits: Businesses can still take regular depreciation or bonus depreciation on vehicles in addition to the credit, subject to existing IRS rules.

• Cash flow considerations: Some dealers allow the credit to be applied at the point of sale, reducing the upfront cost immediately.

• Future planning: Starting in 2025, buyers of new U.S.-assembled cars may deduct up to $10,000 in auto loan interest each year through 2028, which could help businesses financing vehicles.

What Individual Taxpayers Should Know

• Sign a binding contract and make a deposit by Sept 30 to secure eligibility, even if your car arrives later.

• Check your income and the vehicle’s price to confirm you qualify.

• Consider whether a used EV purchase makes sense. The $4,000 credit is also ending at the same time.

Takeaway

There is still a brief window to lock in federal EV tax credits, but time is short. For businesses, this can mean significant savings on fleet purchases and financing costs. For individuals, it may be the last chance to claim up to $7,500 on a new vehicle or $4,000 on a used one. If you are considering a purchase, act quickly and review eligibility carefully.

Sources:CNBC | Investopedia | Investors.com | Time | MarketWatch