Time is Running Out to Take Advantage of Federal Tax Credits on Electric Vehicles

For car buyers interested in electric vehicles, the clock is ticking to take advantage of federal tax credits on new and used EVs before they expire on September 30th.

The federal tax credits, introduced in 2022 under the Inflation Reduction Act, are $7,500 for new EVs and $4,000 for used EVs. However, these credits are being phased out due to President Trump’s One Big Beautiful Bill Act, which is also ending a series of other clean energy credits over the next several months.

With just one week left until the expiration date of the Biden-era EV credit, customers are rushing to dealerships to make their purchases. EV sales hit a record high in August, with new EV sales up 17.7% year over year and used EV sales up 59% for the same period, according to data from Cox Automotive.

Deals to be Had

Dealerships are eager to clear out EV inventory before the arrival of new models in November, leading them to offer their own incentives. Some dealerships are offering monthly lease rates as low as 1% of the car’s sticker price.

For example, the Emich Volkswagen dealership in Denver has reduced EV lease rates to just $40 a month. Customers like Stephen Hynes are saving hundreds of dollars a month compared to their previous car payments, thanks to the tax credit.

What Will Happen After the Tax Credit Ends?

September 2025 could potentially be the single biggest EV sales month in history, according to Tim Horvick, owner of San Tan Ford dealership. However, once the EV tax credit expires in October, the sales landscape may shift.

Some experts believe that the expiration of the tax credit may not have a significant impact on future EV sales, as sales were relatively low to begin with. Electric vehicles currently make up about 7% of new car sales, and while there may be a slight decline post-credit expiration, it may not be drastic.

Automakers have already started to slow their production of electric vehicles and focus more on gas and hybrid models in response to policy changes introduced by the Trump administration. However, the demand for EVs remains strong, as evidenced by the surge in sales leading up to the tax credit expiration.

Conclusion

As the deadline for the federal tax credits on electric vehicles approaches, car buyers are seizing the opportunity to take advantage of the incentives before they expire on September 30th. With dealerships offering attractive deals and incentives, now is the time for consumers to consider making the switch to an electric vehicle.

While the future of EV sales post-credit expiration remains uncertain, the current momentum in the market suggests that electric vehicles are here to stay. Whether you’re in the market for a new or used EV, now is the time to act and benefit from the federal tax credits before they come to an end.