The $7,500 EV Tax Credit is Gone: What Buyers Need to Know in 2026
The federal EV incentive ended September 30, 2025. Here's what changed, what still exists, and how to still get a good deal on an electric car.
Key Deadline Passed: The federal $7,500 EV tax credit ended on September 30, 2025. The $4,000 used EV credit also expired. All EV tax credits will fully sunset on January 1, 2027.
Let's rip off the bandage: the generous federal EV tax credits that made electric cars accessible to millions of Americans are effectively gone. The "One Big Beautiful Bill" signed in July 2025 accelerated the end of these incentives, and as of September 30, 2025, most buyers can no longer claim them.
But here's the thing: the EV market didn't collapse. Prices are adjusting, used EVs are becoming more affordable, and hybrids are filling the gap. Let's break down exactly what happened and what your options are now.
What Changed on September 30, 2025
$7,500 New EV Credit — EXPIRED
The full $7,500 tax credit for new electric vehicles ended September 30, 2025. Only buyers with binding contracts and deposits made before that date can still claim it.
$4,000 Used EV Credit — EXPIRED
The 30% credit (up to $4,000) for used EVs under $25,000 also ended on September 30, 2025.
$7,500 Lease Credit — LIMITED
Some manufacturers can still access commercial credits on leased vehicles, but these are much more restricted and vary by automaker.
EV Charger Credit — ENDING JUNE 30, 2026
The home EV charger installation credit (30% up to $1,000) will end after June 30, 2026. If you're planning to install a charger, do it before then.
All Credits End — JANUARY 1, 2027
Every remaining EV tax credit will fully sunset on January 1, 2027, ending the Inflation Reduction Act's EV incentive program entirely.
Who Can Still Claim the Credit?
There's a narrow window for some buyers. The IRS confirmed that if you had a binding purchase contract with a down payment before September 30, 2025, you can still claim the credit even if delivery happened later. This "time of sale" loophole extends eligibility into early 2026 for some.
You May Still Qualify If:
- You signed a binding purchase contract before Sept 30, 2025
- You made a down payment or deposit before the deadline
- You have a dealer "time of sale" report documenting the transaction
- The vehicle otherwise met all eligibility requirements
What Replaced the Tax Credit
The "One Big Beautiful Bill" introduced a new tax deduction (not credit) for auto loan interest. But let's be real: it's not a replacement.
| Feature | Old EV Credit | New Interest Deduction |
|---|---|---|
| Type | Tax Credit (reduces tax owed) | Tax Deduction (reduces income) |
| Maximum Value | $7,500 | ~$2,500* |
| Applies To | Qualifying EVs only | All vehicles (gas, hybrid, EV) |
| Income Limits | $150K single / $300K joint | $100K single / $200K joint |
| Requirements | US assembly, battery sourcing | US assembly, financed purchase |
*Estimated value depends on tax bracket and loan interest paid
State Incentives Still Exist
Even though federal credits are gone, many states maintain their own EV incentive programs. These vary widely but can still save you thousands:
California
Clean Vehicle Rebate Project (CVRP) — up to $7,500 for income-qualified buyers
Colorado
State tax credit up to $5,000 for new EVs
New Jersey
$4,000 rebate + sales tax exemption
New York
Drive Clean Rebate — up to $2,000
Check your state's DMV or energy office website for current incentives. Many utility companies also offer rebates for EV charger installation.
The Silver Lining: Market Adjustments
Here's what the headlines aren't telling you: the end of tax credits is forcing some positive market changes.
New EV Prices Are Dropping
Average new EV transaction price fell from $48,500 in 2022 to $35,900 in 2025. Manufacturers are competing on price now that they can't rely on subsidies.
Used EV Prices Crashing
Used EV prices are now only $900 above comparable gas cars. With 330,000 EVs coming off lease in 2026, prices will fall further.
Aggressive Manufacturer Incentives
Hyundai, Kia, Ford, and others are offering large discounts and low-rate financing to move inventory. The $10,000 discount on Ioniq 5? That's not a tax credit—it's a dealer incentive.
Your Best Options in 2026
Buy a Used EV
Lease returns flooding the market mean 3-year-old EVs with warranty remaining at steep discounts. A used Tesla Model Y or Ioniq 5 could be under $30,000.
Read our Used EV Guide →Buy a Hybrid
Hybrids never qualified for the EV credit anyway, so nothing changed for them. Get 45-50 MPG with no range anxiety and no charging infrastructure needed.
See Best Hybrids of 2026 →Lease a New EV
Some manufacturers can still access commercial credits on leases and pass savings to consumers. Check current lease offers—they may be better than you think.
Get Expert Help →Install a Charger Now
The EV charger installation credit (30% up to $1,000) ends June 30, 2026. If you're planning to go electric, install your home charger before then.
Deadline: June 30, 2026The Bottom Line
Yes, losing the $7,500 tax credit hurts. But the EV market is adapting. Prices are falling, competition is increasing, and the used market is about to become incredibly attractive. The question isn't whether EVs make sense anymore—it's which path to ownership makes the most sense for you.
For most buyers in 2026, we'd recommend either a used EV (to take advantage of the lease return wave) or a hybrid (if you want electrification without the hassle). Both options can save you money at the pump without relying on government incentives.
Not Sure What's Right for You?
Our free assessment helps you figure out whether an EV, hybrid, or gas car makes the most sense for your driving habits and budget—with or without tax credits.
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