$7,500 EV tax credit hasn't gone away — at least not yet
Questions about the future of the $7,500 federal electric vehicle tax credit might have sown some confusion about its availability for those in the market for a new or used EV.
For the time being, at least, the credit should be available for buyers, although the Detroit Free Press, part of the USA TODAY Network, has heard of instances where auto dealers have held back by not offering the credit to buyers who want it up front in the form of a rebate at the point of sale. Some politicians in Washington have also suggested its days are numbered.
One dealer told the Free Press, however, that his group is actively offering the credit.
A spokesman for the IRS said 'taxpayers should take advantage of all lawful credits that are available to them that make economic sense for them.'
That might include the EV tax credit, which is currently set to expire at the end of 2032. In general, the credit is worth up to $7,500 for qualified new vehicles, or up to $4,000 for qualified used vehicles.
House Speaker Mike Johnson this week told Bloomberg that Republicans in the U.S. House of Representatives might end the credit, however.
'I think there is a better chance we kill it than save it,' Johnson told the news service. 'But we'll see how it comes out.'
President Donald Trump made EVs a target of his ire even before he took office in January, prompting some interested EV buyers to head to dealerships earlier this year in case the credit was eventually repealed. Since then, the president has continued to focus on EVs, including proposing to cut $15 billion in clean energy projects and subsidies as part of his recently released budget outline. The Trump administration said "The budget … ends taxpayer handouts to electric vehicle (EV) and battery makers.'
More: Some EV tax credits risk being rejected by IRS on 2024 returns for long list of reasons
Trump had set the tone on the first day of his second term with an executive order called 'Unleashing American Energy." It referenced consideration of "the elimination of unfair subsidies and other ill-conceived government-imposed market distortions that favor EVs."
But Trump notably also made an unprecedented sales pitch at the White House on March 11 for EV-maker Tesla as the company had come under intense pushback over CEO Elon Musk's work as a key presidential adviser running the so-called Department of Government Efficiency.
It's safe to say that electric vehicle tax credits are high on the priority list for changes or repeal, if the Inflation Reduction Act credits are viewed as a revenue offset as part of a broader tax package, said Garrett Watson, director of policy analysis at the Tax Foundation, a nonprofit research organization.
'We should know much more once Ways and Means releases its draft details potentially over the next week prior to their markup hearing,' Watson said.
Mark Luscombe, principal analyst for Wolters Kluwer Tax & Accounting in Riverwoods, Illinois, said the repeal of the Clean Vehicle Tax Credit is certainly under consideration.
In February, U.S. Senate Republicans proposed a pair of bills to kill the country's $7,500 electric vehicle tax credit and impose a new $1,000 tax on EVs to pay for road repairs, according to Reuters.
Luscombe noted that the House is working on its own budget reconciliation bill.
'The House Ways and Means Committee is certainly looking for revenue to help pay for tax cuts and looking to support President Trump's tax proposals, and eliminating the Clean Vehicle Credit would support both of those objectives,' Luscombe said. 'I believe that the House Ways and Means Committee is still looking at how many of the clean energy credits in the Inflation Reduction Act should be repealed; however, as Speaker Johnson has indicated, the Clean Vehicle Credit is one of the most likely to be included for repeal.'
Luscombe said he does not believe the Senate bills are likely to move forward. The tax package that's most likely to move forward, if anything manages to do so, would likely be the budget reconciliation bill currently being worked on in the House, he said.
More: Amid tough year, Tesla releases a new, cheaper version of the Model Y
'It is possible that the language in the Senate bills would end up being picked up by the Ways and Means Committee for the budget reconciliation bill,' Luscombe said.
Despite some uncertainty, buyers can still get the credit.
Scott Kunes, chief operating officer of Kunes Auto & RV Group, said his dealerships are 'absolutely offering and promoting the credit wherever it applies, including for eligible hybrids.'
The dealership group sells a range of brands, including those from Stellantis, owner of Jeep, Ram, Chrysler, Dodge and Fiat, General Motors, Hyundai, Mitsubishi, Honda, Mercedes-Benz, Volvo and Toyota.
However, he noted uncertainty among dealers.
"Yes, the $7,500 EV tax credit is still available for qualifying vehicles, but we're seeing growing confusion among both dealers and consumers about which models are eligible due to evolving battery sourcing requirements and final assembly requirements. The rules have become increasingly complex, and that's making it harder for some dealers to confidently promote the credit at the point of sale," said Kunes, whose group includes dealerships in Illinois, Iowa and Wisconsin.
The EV tax credit rules are complicated — and will not work for everyone. The credits do not apply to every electric vehicle or plug-in hybrid. Buyers must meet set income limits. Buyers can see FuelEconomy.gov to search for eligible vehicles and better understand the rules.
The IRS has a fact sheet online relating to questions about new, previously owned and qualified commercial clean vehicle credits.
Kunes is not a fan of efforts to do away with the credit, and he warned that to do so could turn EV adoption into a luxury rather than a mainstream option.
"Phasing out or eliminating the EV tax credit would be a step in the wrong direction, especially at a time when affordability is top of mind. The tax credit plays a key role in helping buyers access the long-term benefits of EV and hybrid ownership without bearing the full cost upfront,' Kunes said. 'Instead of rolling back the credit, we should be simplifying and strengthening it so more consumers, and dealers, can confidently take part in the EV future."
Free Press staff writer Todd Spangler contributed to this report.
Contact Eric D. Lawrence: elawrence@freepress.com
This article originally appeared on Detroit Free Press: EV federal tax credit: Where does it stand in 2025?
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