Official: US tax credit for EVs to end in September

US President Donald Trump signed his tax reform and spending package (‘The One Big Beautiful Bill’) into law on 4 July, following approval from both the House of Representatives and the Senate. This seals the end of EV subsidies as of 30 September – in just under three months. The current tax credit of $7,500 applies to households buying or leasing a new electric vehicle, while a $4,000 tax credit is available to buyers of used EVs.

These and other soon-to-expire environmental tax incentives had been extended or modified under the Inflation Reduction Act, a law introduced in 2022 by former President Joe Biden. For example, the Biden administration expanded EV tax credits in 2022 to include leased vehicles and removed the manufacturer cap, which had previously disqualified OEMs once they sold more than 200,000 EVs.

The new bill also ends the ‘Alternative Fuel Vehicle Refueling Property Credit’ on 30 June 2026 instead of 31 December 2032. Just a reminder, the credit is currently available “to businesses and individuals who install qualified refueling or recharging property, including electric vehicle charging equipment, in an eligible location.”

Under the previous administration’s plans, these tax incentives were expected to remain in place for around seven more years, until at least 2032. However, under Trump, signals quickly emerged that the EV tax credit had no future. Competing proposals within Congress recently debated when exactly to end the subsidy. With the agreed date of 30 September, lawmakers in both chambers have opted for the earliest possible deadline.

An earlier draft passed by the House in May had envisaged a phased withdrawal by the end of 2026, while the Senate in mid-June proposed ending tax credits for new vehicles 180 days (around six months) after the law took effect – roughly at the turn of the year.

Industry observers now expect a surge in EV sales over the coming three months as buyers seek to secure the subsidy before it expires. Thereafter, a slump in registrations is anticipated – unless manufacturers compensate with temporary or permanent price reductions.

cnbc.com, reuters.com, congress.gov (bill)