Should You Buy A New EV Before The $7,500 Tax Credit Expires?
In 2009, the American Recovery and Reinvestment Act offered the first federal rebates and tax credits for electric vehicles (EVs) in the United States. The credits were reinstated in 2022, under the Inflation Reduction Act, and written to last until 2032. The current administration had other plans, and lawmakers recently passed a new tax and budget bill (nicknamed the "One Big Beautiful Bill") to reset the EV rebates and tax credit expiration date to September 30, 2025—that's right around the corner.
While there are no plans to offer a federal tax credit for new or used EV purchases after that date, some state and local governments may offer similar programs. Still, none are as comprehensive as the rebates and tax credits that are set to expire in just over 60 days.
This creates quite a dilemma for consumers considering a new or used EV. Should they accelerate their purchase to take advantage of the rebates and credits, or wait and see what the future holds?
Sound advice suggests that if you currently have plans to buy or lease an EV before year's end, it makes sense to accelerate the transaction and complete it before September 30, 2025. If you are only casually considering an EV—primarily enticed by the $7,500 (new) or $4,000 (used) incentives—it's better to wait until next year.
Today, the average new EV costs about $9,000 more than a comparable gasoline vehicle, and used EVs are still about $2,000 more than an equivalent used gasoline vehicle. Until now, automakers have relied heavily on rebates and tax credits to boost sales. They have successfully advertised the discounts in their marketing efforts.
Once the credit is gone in October, demand for EVs is expected to slow significantly. Manufacturers are not obligated to lower prices—most won't be able to discount existing inventory, and consumers will be forced to pay the higher prices (some shoppers will pay more willingly, noting that EVs cost significantly less to own over the long run, thanks to lower charging costs and reduced maintenance).
Over time, most manufacturers will eventually lower prices, offer increased dealer incentives (savings passed on to shoppers), or complement sales with attractive financing and low interest rates—all of this is dependent on market conditions, consumer demand, wholesale battery prices (during manufacturing), and the competitive environment. And they will likely shift marketing campaigns to stress the advantages of EV ownership (zero fuel costs, lower maintenance, and the convenience of home chargers).
In summary, if you are currently in the market for a new or used EV, it's wise to complete the purchase before September 30, 2025. Keep in mind that the rules have changed—not all EVs and buyers qualify for today's credits. Under the new legislation, there are very specific rules regarding North American assembly, battery sourcing, vehicle pricing caps ($80,000 for SUVs, pickups, and vans; $55,000 for other vehicles), and buyer income levels (consult with your tax professional to determine eligibility).
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