Is There Still a Tax Credit for Buying a New Car?

There is no longer a federal tax credit for buying a new car if you’re purchasing in 2026. The One Big Beautiful Bill Act, signed on July 4, 2025, ended the Section 30D new clean vehicle credit, the used clean vehicle credit, and the commercial clean vehicle credit for any vehicle acquired after September 30, 2025.¹ If you bought a qualifying electric, plug-in hybrid, or fuel cell vehicle on or before that cutoff, you can still claim the credit on your 2025 return. One related benefit is still open to new buyers: a credit for installing a home EV charger through June 30, 2026, though it comes with a location restriction that disqualifies many households.

What Changed and When

The Inflation Reduction Act of 2022 built clean vehicle credits worth up to $7,500 for a new qualifying vehicle and up to $4,000 for a used one. The One Big Beautiful Bill Act pulled the plug on all three vehicle credits early, setting a firm acquisition deadline of September 30, 2025.¹

The date that matters is when the vehicle was acquired, not when you took delivery or started driving it. The IRS treats acquisition as the point when a binding written purchase contract is signed, or when you take possession. Someone who signed a contract on September 30, 2025, and picked up the car weeks later can still claim the credit as long as the vehicle is eventually placed in service.² Sign a purchase agreement on October 1, 2025, or later, and there is no federal credit at all.

If You Bought a New EV Before October 1, 2025

The rules in place at the time of your purchase are the rules that apply when you file. Most people who bought before the cutoff will claim the credit on their 2025 federal return, due in April 2026. The maximum credit was $7,500 for a qualifying new electric, plug-in hybrid, or fuel cell vehicle purchased from a qualified dealer, split into two independent halves tied to how the battery was sourced.³

$3,750 if the required percentage of the battery’s critical minerals was extracted or processed in the U.S. or a free-trade-agreement country, or recycled in North America. The 2025 threshold was 60%.⁴
$3,750 if the required percentage of battery components was manufactured or assembled in North America. The 2025 threshold was also 60%.

A vehicle that hit one requirement earned half; one that hit both earned the full $7,500. The IRS published an eligible-vehicle list based on manufacturer certifications.

Income Limits

Only individual buyers qualified, not businesses purchasing for resale. Your modified adjusted gross income had to fall below one of these caps in either the year of delivery or the prior tax year, whichever helped you:⁴

$300,000 for married filing jointly
$225,000 for head of household
$150,000 for single or married filing separately

Blow past the limit in both years and you’re disqualified.

Price and Assembly Requirements

MSRP couldn’t exceed $80,000 for SUVs, vans, and pickups, or $55,000 for sedans and other vehicles.⁵ The MSRP for this purpose was the base sticker plus manufacturer-installed accessories on the window label; destination charges, dealer add-ons, and taxes were excluded.⁶

The vehicle also needed at least a 7 kilowatt-hour battery, a gross vehicle weight rating under 14,000 pounds, and final assembly in North America.⁴

Separately, a vehicle was fully disqualified if any battery components were made or assembled by a “foreign entity of concern,” a designation tied to China, Russia, Iran, and North Korea. That restriction applied to vehicles placed in service after December 31, 2023. A parallel rule on critical minerals from those entities began for vehicles placed in service after December 31, 2024.⁷ These rules pulled several popular models off the eligible list.

If You Bought a Used EV Before October 1, 2025

The Section 25E used clean vehicle credit ended on the same date.⁸ For qualifying purchases from a licensed dealer on or before September 30, 2025, the credit is 30% of the sale price up to $4,000. The car’s sale price couldn’t top $25,000, and the vehicle had to be at least two model years older than the calendar year of purchase.

The income limits were tighter than for new vehicles: $150,000 for joint filers, $112,500 for head of household, and $75,000 for everyone else.⁹

Two limits caught people off guard. The used credit can only be claimed once per vehicle; if a prior buyer already used it on that car after August 16, 2022, it’s spent no matter how many hands the car passes through afterward. And you can’t claim the used credit if you claimed a different one within the previous three years.⁹

How to Claim It on Your 2025 Return

Report the credit on Form 8936 (Clean Vehicle Credits), attaching Schedule A, with your federal return for the year the vehicle was placed in service.¹⁰

For a personal-use vehicle, the credit is nonrefundable. It can reduce your tax to zero, but nothing beyond. If you owe $4,000 in federal tax and qualify for $7,500, the extra $3,500 is lost. There’s no carry-forward and no refund of the unused portion.¹¹

If You Took the Credit at the Dealer

Many buyers transferred the credit to the dealer at purchase for an immediate price cut. You still have to file Form 8936 to reconcile your actual eligibility against what you received.¹⁰

The uncomfortable part: if your 2025 MAGI ends up over the limit, you owe the full transferred amount back to the IRS as additional tax on your return. You don’t repay the dealer. It becomes a tax increase for the year.¹² A late bonus or capital gain can push you over the line, so run the numbers before filing if you’re close.

The Home Charger Credit Is Still Open Through June 30, 2026

Section 30C, the credit for alternative fuel vehicle refueling property, outlived the vehicle credits. Install an EV charger at your primary home before July 1, 2026, and the credit is 30% of the cost, up to $1,000 per charging port.¹³ After that date, this credit is repealed too.

The location rule is what disqualifies many households. The charger has to be installed in a low-income community census tract or a non-urban census tract. The IRS publishes an address lookup tool. A home in a suburban or urban tract that fits neither definition doesn’t qualify regardless of install date.¹⁴

What’s Left for 2026 Car Buyers

Without the federal credit, state and utility programs are the main financial incentive still on the table. State rebates for new battery electric vehicles typically run from a few hundred dollars up to around $4,000, depending on the program and your income. Some utilities offer their own rebates on EV purchases or home charger installations.

Programs vary in structure, income caps, price limits, and available funding. Your state energy office or department of environmental quality is the place to check what’s currently offered and how to apply.

1
Internal Revenue Service. One, Big, Beautiful Bill Provisions
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Internal Revenue Service. Clean Vehicle Tax Credits
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Internal Revenue Service. Credits for New Clean Vehicles Purchased in 2023 or After
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Office of the Law Revision Counsel. 26 US Code 30D – Clean Vehicle Credit
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Internal Revenue Service. FAQ About Income and Price Limitations for the New Clean Vehicle Credit
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Internal Revenue Service. Certain Definitions of Terms in Section 30D Clean Vehicle Credit
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eCFR. 26 CFR 1.30D-6 – Foreign Entity of Concern Restriction
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Internal Revenue Service. FAQs for Modification of Sections 25C, 25D, 25E, 30C, 30D, 45L, 45W, and 179D Under Public Law 119-21
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Internal Revenue Service. Used Clean Vehicle Credit
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Internal Revenue Service. Instructions for Form 8936 Clean Vehicle Credits
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Internal Revenue Service. FAQ About the Eligibility Rules for the New Clean Vehicle Credit Under Section 30D
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Internal Revenue Service. FAQ About Transfer of New Clean Vehicle Credit and Previously Owned Clean Vehicles Credit
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Internal Revenue Service. Alternative Fuel Vehicle Refueling Property Credit
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Internal Revenue Service. FAQ Regarding Eligible Census Tracts for Purposes of the Alternative Fuel Vehicle Refueling Property Credit Under Section 30C