Trump wants to get rid of the EV tax credit—and it’s possible that he’ll convince the incoming Republican Congress to go along with that plan. But what does that mean if you buy an electric car early in 2025, before any changes happen?
Right now, if you meet certain income limits, the clean vehicle tax credits provide up to $7,500 in tax credits for some new EVs, and up to $4,000 for used EVs. If the law changes, it’s possible that you could buy an EV in January and then be out of luck when you file your 2025 taxes. “The answer would depend on the way the legislation is written,” says Keith Fogg, the director of the Federal Tax Clinic at Harvard Law School, who previously worked at the IRS. Congress could theoretically decide to end the tax credit for all of 2025—so it could apply to sales even prior to the law passing.
Still, that’s probably unlikely. “We would not expect that to be a popular approach as it changes the rules on American taxpayers,” says Albert Gore, director of the nonprofit Zero Emissions Transportation Association. Instead, if the credits are repealed, it’s more likely to go into effect after the new law passes.
At this point, many buyers are taking advantage of the credits at dealerships when they buy a car. In the past, they had to wait to claim it on their taxes the following year. Now, there’s the option of transferring their credit to the dealer and getting an instant rebate.
“The most recent data from the Treasury shows that most people are taking advantage of the tax credit at the point of sale,” Gore says. “This is exactly how it was designed to work. By taking the credit at the point of sale, consumers can benefit immediately. It also provides more value to lower income buyers who may not fully benefit by taking the credit when filing their taxes.”
If you’re eligible for the credit, the dealer will give you up to $7,500 off the car right away, send some paperwork to the IRS, and then get reimbursed themselves for the credit. Car dealers—a key Republican constituency—would fight hard against a law that eliminated credits they’ve already handed out. Dealers also offer EVs in leases, and they get the credit in that case. (Leasing EVs is a loophole in the credit: If the car is sold, it has to meet certain requirements to get the credit. But if it’s leased, it’s considered a commercial vehicle, and any EV can qualify for the credit; dealers pass the discount on to consumers.)
It also seems likely that car dealers will fight to keep the credits in place long term, since they have EVs on their lots that they need to sell. And there are other reasons that Republican legislators may want to keep the credits, including the fact that selling more EVs benefits the huge new battery and EV factories that have been built in red states. Trump can’t end the credits unilaterally with an executive order; since they’re law, only Congress can make the decision.
If you bought an EV this year and didn’t get an upfront credit, you’ll be able to claim it on your taxes next year. (Though many buyers did transfer their credits to dealerships, that option was new in 2024, and some dealers have been slow to offer it as an option.) And if you’re considering purchasing an EV soon, the best time to buy might be before the end of the year.
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