Approaching Deadline for Federal EV Tax Credit: IRS Provides Flexibility
The federal electric vehicle (EV) tax credit, worth up to $7,500, is set to expire on September 30, 2025. In a crucial clarification, the IRS has announced that consumers need not take physical possession of their EV by the deadline. Instead, a binding purchase contract and payment made before September 30 suffice.
This flexibility comes amidst a surge in EV sales, ahead of the credit’s elimination under President Trump’s “One Big Beautiful Bill.” July witnessed nearly 130,100 new EV sales, marking the second-highest monthly total on record. Dealers are offering record incentives, averaging $9,800 per vehicle. Interestingly, the tax credit was originally scheduled to run through 2032 under the Biden administration’s Inflation Reduction Act.
Industry analysts predict a significant drop in EV sales post the credit’s expiration. Some even forecast a “collapse” in fourth-quarter 2025 sales. However, manufacturers are already responding with substantial discounts, with some models offering incentives up to 26% off. A study by Harvard University suggests that the credit elimination could reduce EV market penetration by 6% by 2030, while saving the government $169 billion over a decade.
Source: NPR