If You're Thinking About Buying an EV, Trump Made Now the Time To Do It

Yahoo

6 days ago

If you've been on the fence about switching to an electric vehicle (EV), now might be the perfect time to make the leap. Tax credits for buying an EV were supposed to last through 2032, per CNBC, but President Donald Trump's 'One Big Beautiful Bill' killed the tax breaks for new and used EVs. While the bill axed the credit, there's still time to take advantage before EVs become more costly.
With the clean vehicle credit, qualified buyers can receive a $7,500 credit for new EV or a $4,000 credit for a used EV until Sept. 30 2025. The credit can reduce the cost of the vehicle by thousands; however, there are several restrictions to take note of.
Read Next:
Check Out:
Here's what to know about the credit and why it might be the smartest time to buy.
Clean Vehicle Credit Guidelines
Not all buyers can cash in on the credit. According to the IRS, income ceilings stop at $150,000 for individual filers. That rises to $225,000 for heads of household and $300,000 for joint filers.
According to Rob Dillan, automotive expert and founder of EVhype, there are price caps for vehicles, too — $55,000 for sedans and $80,000 for vans, SUVs and trucks.
'Fifty percent or more of a vehicle's battery must also be made with American parts, and the vehicle must be constructed with materials from the United States or countries the United States has trade agreements with,' he explained. 'These criteria will also rule out some EV models, so potential buyers will need to verify eligibility before purchasing.'
In addition, the EV must weigh less than 14,000 pounds in gross vehicle weight, have a battery storage capacity of 7 kilowatt-hours or more, go through final production in North America, and be produced by a qualified manufacturer (excluding fuel-cell vehicles), per TurboTax.
Learn More:
Now Is the Time To Buy
If you qualify, the credit could significantly lower the cost of buying an EV.
'The credit is going to make a big difference in cost, since the average transaction price of a new EV in 2025 is projected to be $56,910,' Dillan said. 'The federal tax credit is also likely to disappear in September based on timing alone, so now certainly seems to be the time for potential owners to move if they want to cash in on this financial bonus.'
EV Considerations
EV sales are up 11.4% year over year, according to Kelley Blue Book, with new models from Acura, Audi, Chevrolet, Honda and Porsche helping drive up sales. But before deciding whether an EV is the way to go, there are many things to consider.
'Depreciation is a big factor to take note of,' Dillan said. 'Some electric vehicle models hold only 49% of their value after two years, compared with 83% for gasoline-powered cars.'
Reasons for the drop in value include battery life, limited charging stations, quickly evolving tech that becomes obsolete in older models and brand reputation, per Diminished Value of Georgia. With that in mind, it reported that the Tesla Model 3 and Hyundai Kona Electric are proving to have a higher resale value than previous EV models.
Owning an EV will save you on gas, but Dillan said without the tax credit savings, 'the massive savings on maintenance and fuel bills are likely not enough to recoup the higher purchase price and possible depreciation hit of an electric vehicle.'
Editor's note on political coverage: GOBankingRates is nonpartisan and strives to cover all aspects of the economy objectively and present balanced reports on politically focused finance stories. You can find more coverage of this topic on GOBankingRates.com.
More From GOBankingRates
Here's the Minimum Salary Required To Be Considered Upper Class in 2025
This article originally appeared on GOBankingRates.com: If You're Thinking About Buying an EV, Trump Made Now the Time To Do It