2026 EV Tax Credit Phase-Out Timeline

What OBBB Changed — Termination Dates by Provision

If you acquired a qualifying new EV by September 30, 2025, you may claim §30D when the vehicle is placed in service, assuming all conditions are met. The IRS considers a binding written contract plus payment by the deadline a qualifying acquisition even if delivery occurs later. See IRS clean-vehicle FAQs (FS-2025-05).

Vehicles Still Eligible — IRC §30D Pre-Cutoff Purchases

For qualifying vehicles acquired by September 30, 2025, including binding contracts with payment before that cutoff and later delivery, the prior §30D rules can apply:

• Vehicle price caps: $80,000 MSRP for SUVs, vans, and pickups; $55,000 for sedans and other vehicles
• MAGI income limits: $150,000 single / $300,000 MFJ / $225,000 HoH (lower of current year or prior year)
• North American assembly requirement and battery mineral/component requirements per IRS guidance

The Used EV Credit — IRC §25E for Pre-Cutoff Acquisitions

For vehicles acquired on or before September 30, 2025 only: The credit equals the lesser of $4,000 or 30% of the sale price.

Vehicle price cap: $25,000 maximum sale price. Vehicle must be at least 2 model years old at time of sale. One credit per vehicle lifetime.

MAGI income limits (§25E):

Unlike the new vehicle credit, the used vehicle credit phase-out is a hard cutoff — if your MAGI exceeds the threshold, you get no credit.

Income Limits and How They're Verified

The IRS verifies income eligibility by using the lowerof the buyer's MAGI in the year of purchase or the prior year. This "lower of" rule prevents situations where someone with a high income in the current year (due to a one-time event) would be denied a credit for which they'd otherwise qualify based on normal income.

Recapture:If you claim the used EV credit and it is later determined you didn't qualify based on income, the IRS can recapture the credit amount on a subsequent return. Buyers near the income boundary should be conservative if income is not settled at time of purchase.

The Dealer Point-of-Sale Rebate Option

Buyers of qualifying pre-cutoff acquisitions could transfer the §25E credit to the dealer at the point of sale, effectively receiving an immediate discount on the purchase price rather than waiting for a tax refund the following April.

• Dealer submits the credit to the IRS via an online portal
• Buyer receives the credit amount as a price reduction at closing
• Works even if the buyer owes no tax (refundable in this context via the transfer)
• The dealer must register with the IRS program — not all dealers participate

State-Level EV Credits That Stack

State-level EV incentives apply independently of (and in addition to) the federal credits and are not affected by the federal §30D termination:

• California: Clean Vehicle Rebate Project and Clean Cars 4 All — income-based rebates up to $7,500–$9,500 for low-to-moderate income buyers
• Colorado: Income tax credit up to $5,000 for new EVs, $2,500 for used EVs in 2026
• Massachusetts: MOR-EV rebate program — varies by year and funding availability
• New York: Drive Clean Rebate — up to $2,000 for new EVs
• Washington: Sales tax exemption on qualifying EVs, worth ~$3,000–$6,000 depending on vehicle price

Three Worked Examples

Example 1: Pre-Cutoff New EV Purchase (Qualifying)

• Single filer, $95,000 MAGI 2024, $110,000 MAGI 2025
• Acquired qualifying Tesla Model 3 (≤$55k MSRP) in August 2025
• Income verification: lower of $95,000 and $110,000 = $95,000 — below $150,000 single threshold
• §30D credit: $7,500 claimed on 2025 tax return filed in 2026

Example 2: Pre-Cutoff Used EV Acquisition (Qualifying)

• Single filer, $65,000 MAGI; acquired a qualifying used 2023 Chevrolet Bolt EV for $23,000 from a dealer via binding contract and payment on September 15, 2025; delivery in October 2025
• Income: $65,000 < $75,000 threshold; price: $23,000 < $25,000 cap; 2023 model is 2 model years before 2025
• Credit: 30% × $23,000 = $6,900, capped at $4,000
• §25E credit: $4,000

Example 3: Rejected — Over MAGI Cap

• Single filer, $85,000 MAGI in 2025 and $90,000 in 2024; acquired an otherwise qualifying used EV from a dealer in September 2025 for $22,000
• Income verification: lower of $85,000 and $90,000 = $85,000 — exceeds $75,000 single threshold
• No §25E credit available.

Frequently Asked Questions

Check Your EV Credit Eligibility with the EV Tax Credit Calculator

The eligibility rules depend on purchase date, vehicle specifications, and your MAGI for two years. The EV tax credit calculator walks through each requirement — §30D vs §25E, income verification, vehicle price cap, and the point-of-sale transfer option. Also see the 2026 federal income tax calculator for your full tax picture after the credit is applied.