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Clock Ticking on EV Tax Credits: Act Before Expiration

Heads Up: Time-sensitive Opportunity — If an electric vehicle is part of your future plans, particularly for personal use or as part of a commercial fleet, it's crucial to act now. The federal tax credits currently benefitting these purchases will cease after September 30, 2025. This guide breaks down significant details you need to know—and steps you should take sooner rather than later.

Upcoming Changes and Their Implications

The abrupt sunset on these incentives—previously set to last until 2032—comes as a result of the One Big Beautiful Bill Act (OBBBA). By eliminating these credits on September 30, 2025, the Act significantly affects financial planning and purchasing decisions for consumers and businesses alike.

Here’s what you’re looking at:

  • New EVs: Receive up to $7,500 in tax credits

  • Used EVs: Eligible for up to $4,000

  • Commercial EVs: Credits range from $7,500 to $40,000, depending on the vehicle's weight

Understanding Eligibility and Deadlines

Meeting the deadline means not just having a signed contract or order but actually taking possession of the vehicle by the cut-off date. Any arrangements beyond this point won't qualify for the tax credit.

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EV Leasing Options and Tax Implications
For leases, it's essential to note that tax credits are typically provided to manufacturers or leasing dealers. Thus, many auto manufacturers have passed these credits on by reducing lease prices. However, this "leasing loophole" will close on September 30, 2025.

Critical Next Steps for Dealers and Purchasers

  • Swift Action Required: Verify vehicle availability and delivery schedules long before the September deadline to ensure compliance and take advantage of credits.

  • Credit Transfer Understanding: Options include transferring the credit upfront to reduce purchase cost or claiming it later via IRS Form 8936.

  • Eligibility Check: Be aware of the unique standards applying to new, used, and commercial EVs including manufacturing origins, price limits, and, where applicable, income thresholds listed below.

    • New EVs: Compliance with sourcing and assembly rules; price ceiling of $55K for cars, $80K for vans/SUVs/trucks; applicable income limits of $150K/single, $225K/head of household, $300K/married jointly.
    • Used EVs: Must be at least two model years old, sold by a dealer, and priced ≤ $25K; credit lesser of $4K or 30% of sale price.
    • Commercial EVs: These can net up to $40,000 without a personal income limitation, provided they meet weight-based criteria.

Anticipating Market Movements

Industry forecasts indicate a surge in EV sales as consumers hurry to capture these savings before October. Post-September, the market could experience a dip, potentially reducing EV market share by 6% by 2030 while simultaneously saving the government an estimated $169 billion over a decade. (Reuters)

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The window for benefiting from these credits is rapidly closing. Make calculated decisions now—align your vehicle acquisition timing and eligibility status effectively to leverage maximum savings.

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