September 3, 2025

Secure Your EV Tax Benefits Before Time Runs Out

Important Update: Are you considering adding a new or used electric vehicle (EV) to your fleet or personal collection? You're on the clock to maximize federal tax benefits as the current generous tax credits are set to end abruptly on September 30, 2025. Understanding these changes is crucial to capitalize on potential tax savings.

The Impact of the OBBBA Termination

The early discontinuation of the EV tax credits, initially extended under the One Big Beautiful Bill Act (OBBBA), represents a significant shift. While the credits were supposed to extend until 2032, now they will cap off on September 30, 2025, with no leniency for later deliveries.

New EV Credit: Up to $7,500
Used EV Credit: Up to $4,000
Commercial EV Credit: Ranges from $7,500 to $40,000, dependent on vehicle weight

Important Acquisition Dates Explained

To leverage these tax credits, you must take physical possession of the vehicle by the cut-off date of September 30, 2025. Contracts signed or deliveries scheduled beyond this date are disqualified.

Leasing Nuances Explained
In leasing scenarios, the clean vehicle tax credit is assigned to the manufacturer or dealer, often reflected by reduced lease pricing. This “leasing loophole” has allowed lessees to access the complete $7,500 credit, even when the specific model fails to fulfill purchase prerequisites. This will also end on September 30. Post this date, any newly executed leases will not qualify for this tax break.

Urgent Actions for Dealers and Buyers

Immediate Action Required: For those in the market, ensure the availability and delivery timings are secure before the deadline.
Understand Transfer Protocols: You can either assign the tax credit to the dealer at purchase, thus securing an upfront discount, or claim it subsequently via IRS Form 8936 on your tax filing.
Know the Eligibility Rules:

○ For New EVs: Compliance with sourcing, assembly, and price limits; income thresholds include $150K for singles, $225K for heads of households, and $300K for joint filers.

○ For Used EVs: Eligible if the vehicle is over two years old, sold by a dealer, and priced at ≤ $25,000; credit is the lesser of $4,000 or 30% of the sale price.

○ For Commercial EVs: Up to $40,000 available based on weight; no income restrictions apply.

Broader Market Dynamics and Timing Strategies

Market analysts anticipate a surge in EV purchases as the deadline approaches, likely followed by a decline in sales in the fourth quarter. A Harvard study predicts a potential 6% reduction in EV market share by 2030, although government savings of $169 billion over a decade are expected from this legislative adjustment. (Reference: Reuters)

With a shrinking timeline, prudent buyers can still take advantage of these savings, provided they act promptly.

Summary Overview

Credit Type	Amount	Eligibility	Deadline
New EV (individual)	Up to $7,500	Meets sourcing, assembly, price, income rules	Take possession by Sep 30, 2025
Used EV	Up to $4,000 (or 30%)	Vehicle ≥2 years old, ≤ $25K	Same as above
Commercial EV	Up to $40,000	Business use, weight-based criteria	Same as above
Leasing loophole	Up to $7,500	Ends after Sep 30	Included above

Takeaway: Be Proactive

If acquiring an EV is part of your strategic plan, take prompt action—confirm orders, ensure timely delivery, and verify credit criteria. Consider consulting with a tax advisor to align with your financial goals. These tax advantages won’t wait.

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