EV tax credit status: what ended and what still counts

By Tom, CPA · Updated October 27, 2026

Part of: Easy Tax Strategies

TL;DR: The new clean vehicle credit (30D), the used clean vehicle credit (25E) and the commercial clean vehicle credit (45W) do not apply to vehicles acquired after September 30, 2025. A vehicle counts as acquired when a written binding contract is signed and a payment made, even if delivered later. The home charger credit (30C) ended for property placed in service after June 30, 2026. State incentives continue.

Educational only, not tax, legal, or investment advice. Examples are illustrations, not predictions. Rules and limits change; verify current figures and talk to a qualified professional about your situation.

The federal EV credit was once a $7,500 coupon taped to the windshield. Then the 2025 tax law pulled it, effective for vehicles acquired after September 30, 2025, and a lot of car shoppers learned the word "acquired" the hard way. If you are shopping now, assume no federal credit. If you signed something around the deadline, the details below matter.

Status as of October 27, 2026, from IRS fact sheets and FAQs on the One Big Beautiful Bill Act. Part of easy tax strategies; see also home energy credits.

CPA Warning Label: Dealer advertising and online calculators may still show the old $7,500 credit; confirm acquisition dates and paperwork before relying on any federal EV credit.

End dates

Nothing replaced these at the federal level. Separately, the 2025 law added a deduction for interest on loans for new vehicles assembled in the U.S., which can apply to EVs and gas cars alike; see car loan interest deduction.

Binding contract rule

IRS guidance says a vehicle is "acquired" when the buyer enters a written binding contract and makes a payment. A nominal down payment or trade-in counts as a payment. If both happened on or before September 30, 2025, the vehicle can qualify even if it was delivered, and placed in service, later. The credit is claimed for the year the vehicle is placed in service, meaning when you take delivery.

So a buyer who signed and paid a deposit on September 25, 2025 and took delivery in January 2026 claims the credit on the 2026 return, assuming all other requirements are met (price caps, income limits, the seller's time-of-sale report to the IRS). What does not work: a refundable reservation fee with no binding contract, or a contract signed in October 2025.

Example

Illustration: Frugal Fran signed a binding purchase contract for a qualifying new EV on September 28, 2025, paid a $1,000 deposit, and took delivery on January 12, 2026. Her 2026 modified AGI is $70,000, well under the $150,000 single limit. The vehicle's MSRP was under the cap and the dealer filed the time-of-sale report.

• Acquired: September 28, 2025 (contract plus payment), before the cutoff.
• Placed in service: January 12, 2026.
• Credit claimed: on her 2026 return, Form 8936, up to $7,500, assuming the dealer did not already transfer it to her at the point of sale.

Lavish Larry test-drove the same model on September 29, "thought about it over the weekend," and signed in October. His credit: $0. His enthusiasm for weekends: diminished.

Transfer at the dealer

From 2024 through the cutoff, buyers could transfer the credit to the dealer for an immediate price reduction. If you did that, you do not claim it again; you still file Form 8936 to report the transfer, and if your income turned out to exceed the limit, you may have to repay the credit. Keep the time-of-sale report the dealer gave you; it is your proof that the IRS has the vehicle on record.

Income and price limits recap

For vehicles that still qualify under the binding contract rule, the old limits apply:

• New (30D): modified AGI up to $300,000 joint, $225,000 head of household, $150,000 others, using the lesser of the year of delivery or the prior year. MSRP caps of $80,000 for vans, SUVs and pickups and $55,000 for other vehicles.
• Used (25E): modified AGI up to $150,000 joint, $112,500 head of household, $75,000 others; price $25,000 or less; credit 30% of price up to $4,000.

Leases

Leased EVs were the famous loophole: the leasing company claimed the commercial 45W credit, with no price or income limits, and often passed some of it to the lessee as a lower capitalized cost. That ended with the same September 30, 2025 acquisition cutoff. Lessees never claimed a credit themselves, so there is nothing to file. If your 2026 lease quote assumes a federal credit, ask the dealer to explain, in writing, where it comes from.

Business vehicles

Businesses lost 45W for vehicles acquired after September 30, 2025, but normal depreciation rules continue. The 2025 law restored 100% bonus depreciation for qualifying property acquired after January 19, 2025, and Section 179 expensing remains, subject to limits. Passenger vehicles face luxury auto depreciation caps unless they are heavy (over 6,000 pounds gross vehicle weight). Business-use percentage must exceed 50% for accelerated methods, and mileage logs are mandatory. Rental property owners and real estate professionals should apply the same business-use rules. For financing, see side-hustle cards, but avoid financing a car on a card; see churning risks and card types.

Home chargers

The 30C credit for home chargers in eligible census tracts (generally low-income or non-urban areas) was 30% up to $1,000 per item for individuals. It does not apply to property placed in service after June 30, 2026. A charger installed in, say, May 2026 in an eligible tract could still qualify on the 2026 return; check the eligible-tract map and keep the installation invoice and date.

Records to keep

• The signed purchase contract showing the date.
• Proof of the down payment or trade-in and its date.
• The delivery or placed-in-service documentation.
• The dealer's time-of-sale report, with the VIN.
• Your Form 8936 and any transfer paperwork.

If the IRS questions a credit claimed for a vehicle delivered after September 30, 2025, the contract and payment dates are your entire case. Keep them for at least three years after filing, and longer if you also deduct business use.

Common mistakes

• Claiming in the contract year instead of the delivery year. The credit goes on the return for the year you took delivery.
• Treating a refundable reservation as a contract. Online reservation fees typically did not create a binding contract.
• Missing income limits. They still apply to grandfathered vehicles.
• Forgetting repayment if you transferred the credit to the dealer and your income turned out too high.

State incentives

Many states, utilities and local air districts still offer rebates for EVs, used EVs, and home chargers, and some offer reduced registration fees or HOV lane access. A few things to check:

• Whether the incentive is a point-of-sale rebate, a post-purchase rebate or a state tax credit.
• Income caps and vehicle price caps, which are often lower than the old federal limits.
• Whether funding is first-come, first-served and currently open.
• Utility time-of-use charging rates, which often matter more than a one-time rebate.

Federal tax treatment of state rebates can vary, so keep the award letter.

Should you still buy an EV?

Without the credit, compare total cost of ownership: price, insurance, charging versus fuel, maintenance and resale. In some markets, used EV prices adjusted downward after the credits ended, which may help buyers. Run your numbers rather than the dealer's. Car costs are one of the biggest levers on a FIRE timeline, so a cheaper used car paid in cash often beats any credit, which Fran could have told you for free.

Bottom line

For anyone shopping after September 30, 2025, the federal EV credit is gone, and the home charger credit followed on June 30, 2026. If your paperwork meets the binding contract rule, claim the credit for the year you took delivery and keep every document. Otherwise, judge the car on its price and running costs, and stack whatever state and utility incentives still apply.