If you’ve been itching to buy an electric vehicle, now is definitely the time. A lucrative tax credit worth thousands of dollars for drivers who buy certain model EVs is about to expire.
Revamped by the 2022 Inflation Reduction Act, the EV tax credit offers a deduction of up to $7,500 with the purchase of a new electric vehicle. Pre-owned EVs qualify for a credit worth up to 30% of the purchase price, up to a value of $4,000.
The EV tax credit was scheduled to sunset in 2032. But after the July passage of the One Big Beautiful Bill Act, which repealed a host of pro-environmental tax breaks, it will now end on Sept. 30, 2025.
How to qualify for the $7500 EV tax credit
Part of the federal government’s Clean Vehicle Credit, the EV tax credit is available to select new EVs, plug-in hybrids and fuel cell vehicles, as well as used EV vehicles.
There are several restrictions, however: For passenger vehicles, the manufacturer's suggested retail price (MSRP) must be $55,000 or less. For vans, SUVs and light trucks, the cap is $80,000.
The car must be assembled in North America and meet strict U.S. sourcing regulations for battery components and critical minerals.
These vehicles are eligible for the EV tax credit
| Vehicle | Model Years | Vehicle Type | MSRP maximum |
|---|---|---|---|
| Acura ZDX | 2024-2025 | EV | $80,000 |
| Cadillac Lyriq | 2024-2026 | EV | $80,000 |
| Cadillac Optiq | 2025, 2026 | EV | $80,000 |
| Cadillac Vistiq | 2026 | EV | $80,000 |
| Chevrolet Blazer | 2024-2026 | EV | $80,000 |
| Chevrolet Equinox | 2024-2026 | EV | $80,000 |
| Chevrolet Silverado | 2025-2026 | EV | $80,000 |
| Chrysler Pacifica PHEV | 2024-2025 | PHEV | $80,000 |
| Ford F-150 Lightning (Flash, Lariat or XLT) | 2023-2025 | EV | $80,000 |
| Genesis Electrified GV70 | 2026 | EV | $80,000 |
| GMC Sierra EV | 2026 | EV | $80,000 |
| Honda Prologue | 2024-2025 | EV | $80,000 |
| Hyundai Ioniq 5 | 2025 | EV | $80,000 |
| Hyundai Ioniq 9 | 2026 | EV | $80,000 |
| Jeep Wagoneer S | 2025 | EV | $80,000 |
| Kia EV6 | 2025 | EV | $80,000 |
| Kia EV9 | 2026 | EV | $80,000 |
| Tesla Cybertruck | 2025 | EV | $80,000 |
| Tesla Model 3 | 2025 | EV | $55,000 |
| Tesla Model X AWD | 2025 | EV | $80,000 |
| Tesla Model Y | 2025, 2026 | EV | $80,000 |
There is also a ceiling on the adjusted gross income you can earn and qualify for the credit.
| Filing status | Income cap |
|---|---|
| Single | $150,000 |
| Head of household | $225,000 |
| Married, filing jointly | $300,000 |
| Married, filing separately | $150,000 |
How to claim the EV tax credit
One of the best aspects of the program is that you don't have to wait until you file your taxes to use the $7,500 credit. So long as your dealer is registered with the IRS's clean vehicle program, you can transfer it to them at purchase and have it applied it to your total.
Otherwise, you claim it on your 2025 federal tax return by completing and including Form 8936 (Clean Vehicle Credits).
The credit is non-refundable, though — to claim the full $7,500, your tax liability for the year must be at least that much.
Originally, you had to take possession of the vehicle before you could claim the credit. But the IRS has loosened its regulations: If you have a contract and made a down payment or trade in by the Sept. 30 deadline, you can claim the credit even if you don't have the keys yet.
Can I claim the tax credit on a used EV?
Pre-owned EVs are eligible for a credit of up to $4,000 (or 30% of the sale price, whichever is less). If they're registered with the clean vehicle program, you can apply the credit to your purchase price.
There are some stipulations:
- The car must be at least 2 years old.
- The MSRP must be no more than $25,000.
- The credit can only be claimed once in a vehicle's lifetime.
- The vehicle must otherwise meet the requirements for the EV credit.
Are EVs more expensive to insure?
Electric vehicles are insured by the same carriers as internal combustion engine (ICE) automobiles. So, in theory, you're not charged more simply for driving an EV. But because they have higher sticker prices, more expensive parts and fewer skilled technicians to work on them, premiums can be up to 20% higher.
In July 2025, auto insurance for ICE vehicles averaged $281 a month, according to ValuePenguin. For EVs, it was $337. But a lot of other factors influence individual insurance rates, including your age, gender, driving history, mileage and, in most states, credit score.
Travelers Auto Insurance
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Travelers auto insurance policies are affordable and backed by the sixth largest company for car insurance by market share according to the NAIC. The company also offers a number of discounts to customers, including discounts for bundling, owning a hybrid or electric car, and good student discounts.
And many carriers have special discounts for EVs: Travelers Insurance offers a discount of up to 10% for hybrid and electric cars, as do Geico, Nationwide, State Farm and USAA.
Lemonade has an EV discount, as well as coverage for home charging stations and portable EV chargers. The online carrier's roadside assistance plan also includes tows to charging stations.
EV tax credit FAQs
How do I claim the $7500 EV tax credit?
If you are purchasing an eligible EV, plug-in hybrid or fuel-cell vehicle from a dealer registered with the federal IRS clean vehicle program, you can transfer the credit to them and have it applied to your sale price.
Otherwise, you can claim it on your 2025 federal tax return, which is filed in 2026. You'll need to include IRS Form 8936 with your tax return and provide the vehicle identification number.
When does the EV tax credit expire?
The 2022 Inflation Reduction Act made the credit active through Dec. 31, 2032. But that deadline was drastically curtailed to Sept. 30, 2025, by the passage of the One Big Beautiful Bill Act.
Do individual states have an EV tax break?
At least 17 states and the District of Columbia have tax incentives for EV owners, although some can't be used in conjunction with the federal credit. Colorado offers a tax break of up to $5,000 for new EVs under $80,000, while Maine & Oregon offer up to $7,500 in incentives.
The Tax Foundation has information on various incentives listed by state.
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