How the EV Tax Credit Works for 2025

Summary: The federal clean-vehicle tax credit (EV tax credit) —worth up to $7,500 for new EVs and $4,000 for used ones — expired for purchases after September 30, 2025. Eligible buyers who entered a binding contract or completed a qualifying purchase before that date can generally still claim the credit on their 2025 tax return. Eligibility depends on income and vehicle-price limits, plus North American assembly and battery-component rules established under the Inflation Reduction Act.

A federal tax credit for electric vehicles (EVs) is available thanks to the Inflation Reduction Act (IRA), a massive piece of legislation promoting clean energy enacted during the Biden administration.

The credit, which is up to $7,500 for qualifying EVs, known as "clean vehicles," and $4,000 for used models, was intended to encourage EV adoption.

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But the EV incentive has ended much sooner than many expected.

With the passage of President Donald Trump’s 2025 tax reform, known by some as the "big beautiful bill," the federal EV tax credit has expired for vehicles purchased or leased after September 30, 2025.

However, this tax break has always been a bit complicated, and there are many questions about how the EV tax credit works.

Key points

• The federal tax credit for new and used EVs ended after September 30, 2025. To claim up to $7,500 for a new EV or $4,000 for a used vehicle, you had to purchase before the deadline. Update: Previously, you had to take delivery of the vehicle by September 30. However, recent IRS guidance offers some relief on that aspect. (More on that below.)
• Eligibility rules apply. Income limits and vehicle price caps remain in effect.
• The phase-out happened faster than previously planned. The new law accelerated the end date, removing the credit for all buyers regardless of manufacturer.
• Some industry experts warn of a likely slowdown in EV adoption once the credit disappears, as most buyers will lose the upfront cost advantage. Some state and local incentives might remain in effect.

Let's dive in and clarify which vehicles qualify and why. If you’re eligible, you need to know how to claim the EV credit when you file your federal income tax return with the IRS.

EV Tax Credit Overview

How does the EV tax credit work for 2025? 

Here are some of the key points to know about how the federal electric vehicle tax credit works.

• Under the OBBB, the EV tax credit was in place only until September 30, 2025.
• The tax credit is taken in the year you take delivery of a qualifying "clean vehicle."
• The incentive is up to $7,500 for new vehicles. The credit amount considers factors such as the vehicle’s sourcing and assembly (which must primarily be in North America for the full credit) and when you placed your vehicle into service. (More on all of that below.)
• Certain used/previously owned EVs can qualify for a tax credit of up to $4,000 or 30% of the sales price (whichever is less).
• As of January 1, 2024, eligible buyers could take the EV tax credit as a discount when purchasing a qualifying vehicle.

However, an important point is that there are income limits for the clean vehicle tax break. Here’s what you need to know.

EV Income Limits

EV tax credit income limits for new and used EVs

Your modified adjusted gross income (MAGI) is used for the following income limits, which apply to qualifying new clean vehicles.

(MAGI, found on Line 11 of Form 1040, often determines your eligibility for various tax breaks and is generally your adjusted gross income (AGI) with certain deductions or income exclusion added.)

When claiming the EV credit, the IRS says that you can use the lesser of your MAGI in the year you take delivery of your EV or your MAGI from the year before you took delivery of the vehicle.

Income limits for new qualifying electric vehicles

You don't qualify for the EV tax credit if you're single and your modified adjusted gross income exceeds $150,000.

The EV tax credit income limit for married couples filing jointly is $300,000.

If you file as head of household and make more than $225,000, you also won’t be able to claim the electric vehicle tax credit.

The EV credit income limit is $150,000 for all other filing statuses.

Qualifications and income limits for used EVs

You must meet the following criteria to qualify for the federal EV tax credit for eligible used/previously owned clean vehicles.

• Be an individual who bought the vehicle for use, not for resale
• Not be the original owner
• Not be claimed as a dependent on another person’s tax return
• Not have claimed another used clean vehicle credit in the three years before the purchase date

Additionally, for the EV tax credit for used vehicles, the IRS says your MAGI can't exceed the following income limits.

• $150,000 for married filing jointly or a surviving spouse
• $112,500 for heads of households
• $75,000 for all other filers

*You can use your MAGI from the year you took delivery of the vehicle or the year before, whichever is less.

Qualifying Vehicles

Which vehicles qualify for EV tax credit in 2025?

Once you know if you’re income-eligible to claim the electric vehicle tax credit, a big question on EV buyers’ minds is which vehicles qualify.

The short answer is that not many models currently qualify for the full $7,500 electric vehicle tax credit. Others qualify for half that amount, and some don’t qualify at all.

But first, price limits determine whether a vehicle is eligible for a tax credit.

EV credit vehicle price limits for new vehicles

• Vans, pickup trucks and SUVs with a manufacturer’s suggested retail price (MSRP) of more than $80,000 won’t qualify for the credit.
• For clean cars to qualify for the EV tax credit, the MSRP can’t be more than $55,000.
• A previously owned clean vehicle will qualify for the tax credit only if it costs $25,000 or less.

Note: “Used” or “previously owned” for the EV tax credit purposes means that the car is at least two years old.

Price limits for used EVs

A used/previously owned electric vehicle must meet the following requirements to qualify for the up to $4,000 federal EV tax credit.

• Have a sale price of $25,000 or less
• Have a model year at least two years earlier than the calendar year when you buy it (For example, a vehicle purchased in 2025 would need a model year of 2023 or older.)
• Not have already been transferred to a qualified buyer after August 16, 2022
• Have a gross vehicle weight rating of less than 14,000 pounds
• Be an eligible FCV or plug-in EV with a battery capacity of at least seven kilowatt hours
• Be for use primarily in the U.S.

2025 EV tax credit eligible vehicles

You can find the complete list of vehicles qualifying for the credit on the federal fueleconomy.gov website. Notably, several vehicles that were eligible for the EV tax credit last year are no longer eligible in 2025.

The Department of Transportation also has a tool on its website to enter the vehicle identification number (VIN) of the electric vehicle you're interested in to determine its eligibility for the EV tax credit. This guidance might help you decide when it’s best (tax-wise) to buy an EV.

Tesla tax credit

As of July 2025, some Tesla models were still eligible for the federal EV tax credit, but only until September 30, when the program officially ended. The requirements are stricter than before, and only certain versions of Tesla vehicles make the cut.

Which Teslas Qualified?

• Model 3: The Long Range (AWD and RWD) and Performance trims generally qualify, as long as the sticker price is $55,000 or less.
• Model Y: Most long-range and Performance versions were eligible if the price remained under $80,000.
• Cybertruck and Model X: Only specific configurations — typically the lower-priced or dual-motor versions — might qualify, depending on how they’re built and priced.

Always confirm eligibility with official government resources.

Commercial EVs

Last fall, Mullen Automotive (NASDAQ: MULN) became an IRS “qualified manufacturer” of commercial EVs. The designation means that some of the automaker’s electric vehicles can qualify for the up to $7,500 EV tax credit.

Regarding the new designation, John Schwegman, Mullen’s chief commercial officer, acknowledged in a statement that the total cost of ownership is important to commercial customers.

Mullen’s commercial EVs qualify for the 2025 federal tax credit, but with stricter battery sourcing and assembly rules in place since last year.

EV Credit Point of Sale

What is the EV tax credit point of sale rebate?

Another new EV tax credit benefit started last year. If you’re buying a qualifying clean vehicle, as of January 1, 2024, you might have the option to take the EV tax credit as a discount at the point of sale when you purchase the vehicle.

• Essentially, you're transferring the credit to the dealer, who can lower the vehicle price by the amount of the credit.
• That means you don’t have to wait until it’s time to file your tax return to benefit from the electric vehicle tax credit.
• Dealers must register to be qualified to pass EV credit savings to consumers.

Qualified dealers can transfer the value of the federal EV tax credit on eligible vehicles for eligible consumers (income limits apply).

That value can either be a cash refund or, as previously mentioned, a discount on the total price of the electric vehicle.

Related: Point of Sale EV Credit is a Hit: What to Know

Claiming the EV Tax Credit

How to claim the $7,500 EV tax credit on your return

To claim the EV tax credit, you file IRS Form 8936 with your federal income tax return.

You’ll need the VIN for your electric vehicle to complete the form.

Form 8936 is used to determine your tax credit for qualified two- or three-wheeled plugin electric vehicles.

Update: The IRS recently confirmed in guidance posted to its website that the critical date for eligibility to claim the EV credit for 2025 will be when a binding written purchase agreement is signed and a payment is made, not when the vehicle is delivered.

This gives buyers a little more time to take delivery of the vehicle. But: The purchase agreement must be executed by September 30, 2025, regardless of the delivery date.

EV Leases

What if you're leasing an EV?

There is a tax credit available for leased electric vehicles. But there’s also a “catch.” The tax credit belongs to the lessor, not to you, the lessee.

Under the IRA, leased electric vehicles are classified as "commercial vehicles," making them eligible for the entire federal clean vehicle credit without meeting strict battery and sourcing requirements.

That means you could have a more comprehensive selection of electric vehicles to save money if the dealer agrees to pass any tax credit savings on to you.

However, remember that the lessor receives the tax credit (not you). Any savings you receive would be in the form of a rebate or a reduced lease price.

Since the Republican-led Congress has passed Trump's 2025 tax reform, clean energy credits, including the tax credit applicable to leased EVs, are being eliminated after September 30, 2025.

More from Kiplinger Leasing an EV? The Tax Credit 'Loophole' for That Is Going Away

Home EV Chargers

Is there a federal EV charger tax credit?

If you're in the market for an EV home charger, the "Alternative Fuel Refueling Property tax credit" was extended under the Biden administration through December 31, 2032, but will now end under Trump's new tax bill after June 30, 2026.

For more information on the federal tax credit for electric vehicle chargers, see Kiplinger's guide to the federal EV charger tax credit.

Read More

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