Understanding 2025 EV Tax Credit Changes
Understanding the 2025 and 2026 EV Tax Credit Changes
Federal EV incentives are changing quickly, and the latest tax reform legislation signed in July 2025-known as the "One Big Beautiful Bill" (OBBBA)-has set new timelines that every car shopper should know. At Dover Chevrolet, we want to help our customers make sense of these changes so you can plan your purchase wisely and take advantage of savings while they last. The key takeaway is that for most buyers, the standard federal EV tax credit will end on September 30, 2025, with only limited eligibility for certain vehicles extending into 2026.
What Happens in 2025?
If you're considering a new EV purchase, the window to claim the traditional federal credit of up to $7,500 closes on September 30, 2025. After this date, most new electric vehicles will no longer qualify. The only way to lock in the credit beyond the September deadline is by having a binding purchase contract signed and partially paid before the cutoff date. This makes the remainder of 2025 a critical time for drivers looking to maximize incentives when buying an EV.
New EV Tax Credits in 2026
Starting in 2026, the standard credit is eliminated for most automakers. However, OBBBA includes a temporary extension of the $7,500 credit under very restrictive conditions. To qualify, a manufacturer must not have sold more than 200,000 EVs in the U.S. by the end of 2025.
That means many of the most popular EV brands, including Tesla, General Motors, Ford, Hyundai, Kia, Volkswagen, and Nissan, will no longer be eligible for credits in 2026, since they've already exceeded the sales cap. Instead, the credit may only apply to smaller or newer EV manufacturers such as Rivian, Lucid, Honda, Mazda, and a handful of others. This limited extension gives these companies a short window to attract customers with the federal incentive.
All EV tax credits-new, used, and commercial-are scheduled to end completely on January 1, 2027.
Restrictions That Still Apply
Even for the smaller group of vehicles that may qualify in 2026, buyers must meet the same restrictions established under the Inflation Reduction Act. These include:
MSRP Cap: SUVs, vans, and pickup trucks must have a Manufacturer's Suggested Retail Price of $80,000 or less. Other vehicles, such as sedans and hatchbacks, must be priced at $55,000 or less.
Income Limits: Modified Adjusted Gross Income (MAGI) cannot exceed $300,000 for married couples filing jointly, $225,000 for heads of household, and $150,000 for all other filers.
Battery Sourcing: To receive the full $7,500 credit, 70% of critical minerals must be sourced from the U.S. or a free-trade partner, and 70% of the battery components must be manufactured or assembled in North America.
Other EV Credits Ending
Along with the new EV credits, several related incentives are also set to expire:
Used EVs: The federal credit of up to $4,000 for previously owned clean vehicles will end on September 30, 2025.
Commercial/Leased EVs: Credits for leased EVs, which fall under the commercial clean vehicle program, will expire on December 31, 2025, for most automakers.
Home Chargers: The Alternative Fuel Refueling Property credit for home EV chargers will end after June 30, 2026.
Alternative Credits and State Incentives
Even after federal credits phase out, buyers may still have options. Certain commercial vehicle credits under IRC Section 45W may remain available for larger vehicles or fleet purchases. In addition, many state and local governments continue to offer rebates and incentives that make EV ownership more affordable. At Dover Chevrolet, our team can help you research which programs are available in your area so you can take advantage of every possible benefit.
Plan Ahead with Dover Chevrolet
The changes to federal EV tax credits make timing more important than ever. If you're planning to go electric, purchasing before September 30, 2025, gives you the best opportunity to maximize incentives. While limited credits may still exist for some manufacturers in 2026, they come with strict conditions and are only temporary. By 2027, federal EV credits will be gone entirely.
At Dover Chevrolet, we're committed to helping you navigate these changes with clarity and confidence. Visit us today to explore our lineup of new Chevrolet EVs, learn about eligibility, and take the next step toward driving electric with peace of mind. With the right information and guidance, you can make the most of the opportunities available now-before they're gone.
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