If you are thinking about buying an electric vehicle, the clock is now ticking. President Donald Trump’s “One Big Beautiful Bill” has officially passed Congress, and with it, a countdown that will kill the popular $7,500 federal tax credit for new electric vehicles.
You now have less than three months to act. The tax credit officially expires on September 30, 2025. Initially, there were rumors the EV credits would last 180 days from when the bill was signed, a six-month grace period.
This law is the centerpiece of Trump’s second term, a legislative victory he can claim alongside his mass deportation initiatives as a promise kept to his base. It includes sweeping changes to the American economy, including cuts to social programs like Medicare and new work requirements for food stamp recipients. But one of its most immediate and tangible impacts is a full scale assault on clean energy incentives, and walks back some of the progress made under the Inflation Reduction Act, which previously supercharged EV sales with consumer-friendly subsidies.
For consumers, the most significant change is the termination of the EV tax credit. While it was initially rumored the credit might be phased out over six months, the final version of the bill accelerates the timeline dramatically. After September 30, the $7,500 credit for new EVs will be gone. The smaller $4,000 credit for used EVs will also disappear on the same date.
The bad news for clean energy does not stop there. The 30% tax credit for rooftop solar installations is now set to end on December 31, 2025, as are incentives for geothermal heat pumps and other home energy devices.
The new law also dismantles the regulatory framework that has pushed automakers to produce more electric vehicles. It effectively guts the federal Corporate Average Fuel Economy (CAFE) standards by reducing the penalties for noncompliance to zero. Previously, automakers who failed to meet fuel efficiency targets had to pay steep fines or buy regulatory credits from more efficient companies like Tesla. Now, that financial pressure is gone.
In a related move, Congress has revoked the EPA waivers that allowed California and the 17 other states that follow its lead to enforce stricter emissions rules, including Zero Emission Vehicle (ZEV) mandates. These state level programs required automakers to sell a certain percentage of zero emission vehicles or purchase credits from competitors. Without the federal waivers, these state mandates are no longer legally enforceable.
For automakers, this means the financial incentive to produce and sell EVs has been significantly weakened. For a company like Tesla, which earned substantial profits in recent years from selling these credits to less compliant automakers, it means a key revenue stream has vanished.
But for the average person, the message is much simpler: the era of federally subsidized electric vehicles is coming to a very abrupt end.
Our Take
If you’re in the market for an EV, this is your last call. After September 30, the $7,500 and $4,000 tax breaks disappear. And unless there’s a dramatic shift in power, they aren’t coming back anytime soon.
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