Incentives for hybrid or electric cars have been part of the tax code for nearly two decades — but they’re coming to an end soon.
The One Big Beautiful Bill Act moved up the end date for EV tax credits by seven years. Now, taxpayers can only claim EV credits for vehicles purchased on or before Sept. 30, 2025, rather than vehicles purchased before the end of 2032.
The latest version of these rebates came in the Inflation Reduction Act, passed in 2022. This legislation made credits of up to $7,500 available to qualified buyers purchasing certain new vehicles. Credits of up to $4,000 were also available to qualified buyers purchasing certain used EVs.
These credits remain available until the Sept. 30 deadline, so buyers intending to purchase an electric vehicle should consider making the decision sooner rather than later if they want to qualify for the rebate.
To be eligible, buyers need to have incomes below a certain threshold, and the vehicles must meet production requirements designed to stimulate domestic EV manufacturing.
This change doesn’t affect state rebates, which remain in effect in some states.
Ending the credit will put a damper on EV demand, but the magnitude of the change is yet to be determined. In AAA’s most recent electric vehicle survey, 12% of respondents said that the potential elimination of tax credits and rebates was a barrier to purchasing an EV. And research from Recurrent found that used EVs that are eligible for rebates sell much faster than used EVs that aren’t eligible for rebates.
Car buyers may qualify for a new deduction on auto loan interest added as part of the bill, depending on their income. The deduction applies to both EVs and gas-powered vehicles, as long as their final assembly occurred in the United States.
The 30% credit for installation of home solar panels, heat pumps and certain other clean energy technology is ending Dec. 31.
If you are interested in solar panel installation, act now to save money and power your EV.
AAA members can save up to 20% or more on solar when they shop with EnergySage. Compare quotes from top-rated installers and maximize your solar savings with EnergySage's free marketplace.
AAA’s Recommendation: Whether you own an electric vehicle or a gas-powered car is up to you – and you should consider lots of factors in making that choice. No matter what type of vehicle you’re choosing, we recommend visiting a dealership, test driving one, and asking as many questions as possible to make an informed decision.
