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EV Makers Rush to Boost Sales as $7,500 Federal Tax Credit Nears Expiration

Updated: Oct 4

Electric vehicle (EV) manufacturers are launching aggressive promotions to boost sales ahead of the September 30, 2025, expiration date for the federal $7,500 EV tax credit. This deduction, first enacted in 2008 and later expanded under the Inflation Reduction Act, has been a core incentive driving EV adoption across the United States.


What’s Happening?

Automakers including Tesla, Ford, and General Motors are rolling out offers such as:


  • Home charging station packages

  • Extended warranty coverage

  • Free maintenance services


The goal is to accelerate purchases before buyers lose the credit, which applies to both new and used EVs:

  • New EVs: Up to $7,500 federal tax credit

  • Used EVs: Up to $4,000 federal tax credit (subject to income and vehicle requirements)


Why Is the Credit Ending?

Under the recently enacted One Big Beautiful Bill, green energy tax incentives—including EV credits, solar ITCs, and wind PTCs—begin phasing out between 2026–2028. However, the EV credit’s early sunset date of September 30, 2025, reflects a negotiated compromise to redirect incentives toward traditional energy and infrastructure investments.


Impact on the EV Market

According to auto industry analysts:

  • EV demand could fall by up to 27% after the credit expires

  • Average EV prices remain 20–25% higher than comparable gas vehicles

  • States with additional credits (e.g. California’s Clean Vehicle Rebate) will become critical markets for continued adoption


Illustrative Example: Tesla Model Y

Model

MSRP

Federal Credit

Net Effective Price (Before State Credits)

Tesla Model Y Long Range

$47,990

$7,500

$40,490

Post-September 30, 2025

$47,990

$0

$47,990

Planning Considerations for Tax Professionals


  • Accelerate purchase advice for clients planning to buy EVs before October 1, 2025.

  • Review income thresholds and vehicle eligibility for both new and used EV credits.

  • Model state-level incentives to offset the loss of federal credits in 2026 and beyond.

  • Coordinate with Section 179 and business-use depreciation strategies for clients purchasing EVs through their business entities.


How Bizora AI Supports EV Tax Planning

Bizora AI continuously tracks federal and state energy incentives, helping tax professionals:

  • Calculate EV tax credit eligibility under IRC §30D and §25E

  • Generate client memos outlining credit phase-out timelines

  • Model vehicle depreciation schedules and leasing vs. purchase strategies


Need an instant scenario analysis for clients planning an EV purchase before the credit ends? Ask Bizora AI for structured, vehicle-specific tax planning insights in seconds.

 
 
 

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