Time Is Running Out: EV Tax Credit Ends September 30, 2025
- Sophia Yu
- Aug 19
- 3 min read
If you’ve been thinking about adding an electric vehicle (EV) to your business fleet or personal garage, the clock is ticking. The federal EV tax credit—worth up to $7,500 for new EVs and $4,000 for used EVs—is set to expire on September 30, 2025. Once it’s gone, there’s no guarantee it will return in its current form.
How the EV Tax Credit Works
The EV tax credit directly reduces your federal tax liability. For example, if you owe $8,000 in federal taxes and claim a $7,500 EV credit, your tax bill drops to $500. If the credit exceeds your tax liability, some credits may be nonrefundable for individuals, meaning you cannot receive the excess as a refund, though businesses may be able to carry forward unused credits depending on the rules.
The key requirement is that the vehicle must be purchased and placed in service by September 30, 2025. Simply ordering the vehicle isn’t enough—you must take delivery and start using it before the deadline.
Rules for Individuals
For personal-use buyers, the Clean Vehicle Credit (IRC § 30D) comes with eligibility limits:
Income caps: Modified adjusted gross income must be under $150,000 for single filers, $300,000 for married filing jointly.
MSRP limits: $55,000 for cars, $80,000 for SUVs, vans, and trucks.
Battery sourcing requirements: Certain percentages of critical minerals and components must come from U.S. or trade-partner sources.
Example:
Jane buys a new qualifying EV for $45,000 and her tax liability for the year is $6,000. She can claim a $7,500 credit, which reduces her tax bill to $0. Because the credit exceeds her tax owed, the extra $1,500 is not refundable, but she still saves significantly.
Rules for Businesses
For commercial buyers, the Commercial Clean Vehicle Credit (IRC § 45W) is far more flexible:
No income limits—credit applies regardless of taxable income.
No MSRP limits—luxury EVs and high-priced work vehicles still qualify.
No battery sourcing restrictions—more makes and models are eligible.
Credit amount is up to $7,500 for light-duty vehicles (under 14,000 lbs) and up to $40,000 for heavier commercial EVs.
Example:
ABC Landscaping purchases a new electric van for $60,000 for their business fleet. They are eligible for a $7,500 commercial clean vehicle credit. If their business owes $10,000 in federal taxes, the credit reduces it to $2,500. If their tax liability were only $5,000, they could apply the remaining $2,500 in future years depending on the carryforward rules.
To-Do List for Taxpayers Considering an EV Purchase
Check eligibility: Determine whether you qualify under the individual or business rules.
Research qualifying models: Review the IRS list of eligible EVs for your category.
Confirm delivery timing: Order early and verify the dealer can deliver before September 30, 2025.
Gather documentation: Ensure you receive the VIN, proof of delivery date, and dealer certification of credit eligibility.
Review your tax situation: Work with a tax professional to see how much of the credit you can use and whether any carryforward applies.
Explore other incentives: Check for state or local EV rebates that can stack with the federal credit.
Why Act Now
Whether you’re replacing a single company car or upgrading your fleet, this is a rare chance to capture substantial tax savings while also reducing fuel and maintenance costs.
September 30, 2025, is a hard stop for both individual and business EV credits. For businesses, the rules are much more generous—making this one of the best tax-saving opportunities available right now.
Want to Set This Up the Right Way?
.If you’d like to see whether the EV tax credit is the right move for you—and exactly how it could work in your situation—schedule a one-on-one evaluation with our CPA. We’ll walk through your eligibility, potential savings, and the smartest timing for your purchase.
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