The countdown has begun for one of the biggest savings available to people buying electric vehicles (EVs) in the United States.
Under the newly passed “Big Beautiful Bill,” the federal EV tax credit—up to $7,500 for new cars and $4,000 for used ones—will officially end on September 30, 2025. After that, these incentives will be gone for good, unless Congress changes its mind, which experts say is highly unlikely.
This change is not just a small update in tax law—it’s a major shift for both car buyers and the auto industry. For anyone thinking about buying or leasing an EV, time is now running out to make the most of this financial benefit. If you want to save thousands of dollars, you must complete your EV purchase before the deadline.
How Big Is the EV Tax Credit?
At the moment, if your new electric vehicle qualifies, you can claim up to $7,500 in federal tax credits. For used EVs, the benefit can go up to $4,000, depending on eligibility. Losing this credit is like losing the value of a small family holiday—or a major portion of your vehicle’s down payment.
With these tax breaks going away, buyers will now have to pay the full sticker price. That matters because electric vehicles still cost more than traditional fuel-based cars. On average, a new EV costs around $9,000 more than a petrol or diesel car of the same type. Even in the used car market, EVs cost about $2,000 more.
These federal credits have helped to bridge this price gap, making EVs more affordable. Without them, the price difference becomes very clear, and that could affect how many people are willing to make the switch to electric.
The Real Long-Term Savings of Owning an EV
However, the story doesn’t end with just the purchase price. Even though EVs are more expensive up front, they save you money in the long run.
One academic study published in the journal Joule found that over 15 years, the average EV owner saves about $7,700 in fuel costs compared to someone who drives a petrol or diesel car.
These savings can go up even more if you charge your EV at home during off-peak hours, when electricity is cheaper. In places like Washington state, people have saved more than $14,000 over the life of their EV.
On top of that, EVs don’t need oil changes, have fewer parts that can break down, and don’t suffer from problems related to fuel or exhaust systems. This means lower repair bills and less maintenance.
Experts like Ingrid Malmgren from Plug In America say that even without the tax credits, owning an EV is still a smart and responsible choice, especially if you drive long distances or have access to low-cost electricity.
In many cases, the money you save every month on fuel and repairs adds up quickly, helping to recover the higher cost of the car sooner than people expect.
What You Need to Do Before the Tax Credit Ends
If you are considering buying an EV and want to use the federal credit, you must act quickly and wisely. First, the vehicle you choose must meet some conditions. It has to be assembled in North America, have a battery capacity of at least 7 kWh, and meet sourcing rules related to battery materials and minerals.
If your vehicle meets only one of the battery rules, you may still get $3,750 in tax credit. But if it meets both, you qualify for the full $7,500. However, your income also matters. If you are married and filing jointly, your total household income must be less than $300,000 to be eligible.
There are two ways to get the benefit. One is to get an instant discount at the dealership. In this case, the credit is directly applied to your vehicle’s price at the time of purchase.
The dealer must report this to the IRS and give you the necessary paperwork. The other way is to claim the credit when you file your taxes, using IRS Form 8936. This option is only available if you didn’t receive the instant rebate at the dealership.
EV Deals May Replace Tax Credits After 2025
As the tax credit deadline approaches, car manufacturers and dealers are already preparing to keep buyers interested. Experts expect a wave of special discounts, dealer rebates, and offers like free or discounted home EV chargers. These deals will try to make up for the lost tax credits and encourage people to continue buying electric vehicles.
Even though losing the federal tax credit will be a big blow to affordability, these promotions may soften the impact for some buyers. Still, the best chance to save the maximum amount remains before September 30, 2025. After that date, buying an EV will likely become more expensive, at least in the short term.