The recently passed budget reconciliation legislation, also known as the One Big Beautiful Bill, represents an overhaul and “reset” of electric vehicle policy in the U.S. While it extends general tax relief for individuals and businesses, it also eliminates and phases out certain incentives that had supported EV adoption, infrastructure development and domestic manufacturing. Below is a breakdown of the key tax-related changes and strategic considerations, as we show it’s not all bad news for auto-related businesses.
Elimination of the Clean Vehicle Credits (New and Used)
The federal tax credits for new and previously owned clean vehicles (IRC §30D and §25E) will be eliminated for purchases made after Sept. 30, 2025. These credits provided up to $7,500 for new EVs and up to $4,000 for qualifying used ones, significantly closing the cost gap between electric and internal-combustion-engine vehicles. Their elimination marks a pivotal shift in federal policy.
After Q3 2025, buyers lose this key incentive, which is likely to reduce EV demand, especially among price-sensitive consumers. Automakers and dealers should plan for a sharp uptick in sales activity ahead of the deadline, followed by a potential softening in Q4. Customers should be encouraged to finalize their purchases and deliveries prior to the expiration date to secure full credit value.
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