Goodbye Electric Vehicle Tax Credits

Electric vehicle tax credits are set to expire September 30, 2025

September 22, 2025 • Estimated Reading Time: 10 minutes

⚠️ RIP EV Tax Credits

With the One Big Beautiful Bill, electric vehicle tax credits are set to expire starting September 30, 2025. Let’s dive into what these tax credits were in the first place, what changes to expect after September and most importantly: how this affects your wallet.

What was the electric vehicle tax credit?

The EV tax credit was a tax incentive created by President Obama back in 2009, and went into effect during 2010. The EV tax credit was designed to offset the high production cost of these vehicles, which are ultimately passed on to the consumer. Essentially the government gave incentives for consumers to buy EV’s by knocking off qualifying dollar amounts on sticker prices at dealerships. That’s how it felt at least considering it was a tax credit you received at the end of the year. Government make EV’s cheaper. People buy. Simple right? Consumers could either choose to claim the credit on their taxes or opt to transfer the credit to an eligible dealer for an immediate discount on the vehicle at purchase. Over time there have been significant changes and updates for qualifying electric vehicle purchases. Most notably, there were updates to the EV tax credit with the Inflation Reduction Act of 2022 and the One Big Beautiful Bill in 2025.

Up until the One Big Beautiful Bill (which we’ll get to) the EV tax credit worked like this:

An individual could purchase a new EV for their own use and primarily use it in the US. An EV could be purchased and used in the US under a business as well. Assuming the individual had an income that did not exceed a specific level, they could apply a number of credits against their new EV purchase as laid out under the Internal Revenue Code Section 30D. As of 2025, here were the income thresholds, available credits and eligible EV’s for new purchases.

To be eligible for EV tax credits, income limits may not exceed:

$300,000 for married couples filing jointly or a surviving spouse
$225,000 for heads of households
$150,000 for all other filers

For vehicles placed in-service after April 18, 2023 (New EV’s in the last 2 years basically)

Up to $3,750 if the vehicle meets the critical minerals requirement only
Up to $3,750 if the vehicle meets the battery components requirement only
Up to $7,500 if the vehicle meets both requirements mentioned above

EV Eligibility

Have a battery capacity of at least 7 kilowatt hours
Have a gross vehicle weight rating of less than 14,000 pounds
Undergo final assembly in North America
MSRP could not exceed $80,000 for vans, sport utility vehicles and pickup trucks
MSRP could not exceed $55,000 for other vehicles

TLDR: up until now, qualified consumers could purchase specific EV’s and deduct up to $7,500 in federal taxes

What can I expect after September 30, 2025?

Everything you have read up to now was fair game all the way up to 2032 until we met the One Big Beautiful Bill in July, 2025. That changed the deadline for EV purchase tax incentives from 2032 to September 30, 2025. Sorry Elon. In Sections 70501 and 70502 of the bill, the EV tax credit for new and previously owned EV sales is set to terminate at the end of September.

As you can imagine, this was a tough break for EV manufacturers who are now struggling with a demand crisis on their hands. That $7,500 credit that consumers used to be able to wipe off their tax bill every year is no longer available for purchases beginning October 1, 2025.

How does this affect my wallet?

If you were never planning on buying an electric vehicle - nothing. Life goes on. If you were planning on buying an eligible EV and receiving credits off your due taxes in 2025, you should probably buy one asap. Manufacturers and dealerships will most likely be able to find wiggle room with the timeline so that customers demanding credits for new EV purchases can have their paper work filed before October 1, but there is no guarantee.

OEM’s and distributors who supply EV manufacturers should stay conscious of where consumers may drift if they stop purchasing EV’s. The One Big Beautiful Bill offers new incentives for writing off interest on vehicles that have been assembled in the US, are under 14,000 pounds and include pickup trucks. If you see a slip in purchase orders from Tesla, does that mean Ford will see increased pickup truck demand from these changes? Just speculation, not business advice.

EV stock holders need to pay close attention to company earnings after Q4. It will be imperative to keep an eye on demand and units sold by each manufacturer to see if the absence of the tax credit affects demand as much as Wall Street anticipates.

EV drivers, so long as you were not planning to buy a new EV anytime soon, and you filed for your tax credit at a past date and received it - you’re chilling. No, you may not get the credit you received for your past purchase moving forward, but hey you can toast to at least having received a credit in the past.

2025 EV’s still eligible for the entire $7,500 Tax Credit (suggestions)

✏️Why now is the best time to start tutoring

School is back in session which means before you know it, students will be cramming for exams and looking for an edge to stay on top of their academics. The demand in the market is here and will be here until final exams next spring. Feel confident in a subject and thinking about tutoring? Realizing that since covid, students seem to have erm…. regressed? Consider this: the US treasury just released an updated list of professions where tipped income may be excluded. Occupation #507 on this list: tutors. As we know, in the new One Big Beautiful Bill, there’s a whole section outlining the requirements and thresholds for withholding taxes on tips. Effective 2025 - 2028 individuals reporting cash tips as a form of income may deduct up to $25,000 worth of cash tips based on their gross income. So here’s a thought for individuals looking to make some side money tutoring who make less than $150K per year. I mention that $150K per year because tip deductions phase out for taxpayers with modified adjusted gross income over $150,000 per the OBBB.

Idea: Tutor for ‘free’ and get paid in ‘cash tips’. For the tips to be eligible for the deduction, remember they need to be cash tips. No spinning over an iPad asking for tips to students is going to work for the deduction.

If you are positive that you cannot clear $25K this year in a side business of tutoring, then why apply those earnings to your total gross income? You get taxed on that. Why not find trusting clients who will pay you in the form of cash tips? That way you can fully report the amount you made as a tutor but will not have to pay taxes on those tips? Good ol’ legal reporting. Or maybe find a balance of tutoring fees and suggested cash tips for clients to pay. It doesn’t look great from the clients perspective, but hey when you walk them through what a tax hack it is, your credibility as a smart tutor might increase. Just sayin’.

The proposal above is just an idea. It is not tax advice nor business advice. It’s just something to get the creative juices flowin. Always consult a tax professional or financial planner before making decisions that could impact your financial records.

🚗 Did You Know?

Electric Vehicles can capture energy when you hit the brakes? That’s right! It’s called regenerative braking and it’s a system that absorbs energy that would normally be lost as heat, and converts it back into electricity to recharge the EV’s battery! This system improves the vehicle's overall efficiency, increases its range, and reduces wear on traditional friction brakes.

Till next time,

Tax Hacks

^{The content provided in this newsletter is for informational purposes only and is not intended to be, and should not be construed as, professional tax, legal, or financial advice. While we strive to ensure accuracy, tax laws are complex and subject to change. Always consult with a qualified tax professional or financial advisor regarding your specific situation before making any decisions based on the information provided herein.}

Goodbye Electric Vehicle Tax Credits

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