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Overview: What The 2025 EV Credit for Vehicles Covers

Here’s a clearer, business‑person‑friendly explanation of the EV tax credit changes under the One Big Beautiful Bill Act, signed on July 4, 2025, focusing on what the credit covers, the three key requirements to claim it, and how dealers can pass it through to buyers.


Overview: What the 2025 EV Tax Credit For EV Vehicles Covers

  • New Clean Vehicle Credit (IRC Section 30D):

    • Worth up to $7,500 for a qualifying new electric vehicle (EV) purchased before September 30, 2025.

    • Qualifies for cars up to $55,000 and SUV’s up to $80,000.

    • A married couple filing jointly modified adjusted gross income can’t exceed $300,000 and $150,000 for individuals.

    • Structured as two components—each $3,750—based on sourcing of critical battery minerals and battery components in North America or U.S. trade‑agreement countries, and final assembly in North America.

  • Used Clean Vehicle Credit (Section 25E):

    • Up to $4,000 for a used EV that costs $25,000 or less, bought from a licensed dealer, again before September 30, 2025.

  • Commercial Clean Vehicle Credit (Section 45W):

    • Applicable to fleets or commercial buyers, offering up to $40,000 depending on vehicle weight and other criteria. Also subject to the September 30, 2025 cutoff.

3 Key Requirements to Claim the Credit

Every purchaser (or lessee) must meet three critical conditions:

1. Take delivery by September 30, 2025

Whether you’re buying a new or used EV—or a commercial one—you must physically take possession on or before September 30, 2025. Vehicles acquired after that date won’t qualify.

2. Vehicle meets assembly and sourcing rules

  • New vehicles must be assembled in North America and meet sourcing thresholds for battery minerals and components—tracked under the IRA rules (e.g. mineral and component percentages increasing year by year).

  • Used EVs must be sold by a dealer (not private seller), be at least two years old, cost under $25,000, and meet income thresholds to qualify.3. Buyer must meet personal/corporate eligibility

  • For new and used credits, buyers must meet AGI income limits and cannot exceed MSRP caps.

  • For commercial credits, the taxonomy depends on vehicle weight and business usage.
    Additionally, for new EVs, critical battery materials must be sourced from approved countries or domestic sources.

Dealer‑Side: When Dealers Can Claim and Pass Through the Credit

Under prior law, dealers could leverage the “lease loophole” (whereby they claimed the full credit when leasing vehicles) and effectively reduce upfront lease costs. The One Big Beautiful Bill ends that effective pass‑through for leases executed after September 30, 2025.

Before September 30, 2025:

  • Dealers can claim the full credit for leased vehicles and may pass savings on to customers—typically via lower monthly payments. After that date:

  • No federal EV tax credits for new, used, or leased vehicles.

  • A new auto‑loan interest deduction may apply instead, but it’s introduced separately and doesn’t directly reduce the car’s sticker price.

Why This Matters: What You Should Know

  1. Deadline is firm: Only EVs delivered by September 30, 2025 qualify. Miss that—and you lose eligibility.

  2. Business impact: For companies buying EVs for fleet use, acting quickly unlocks up to $40,000 per vehicle under the commercial credit.

  3. Interest deduction might offset some: For buyers of U.S.-assembled vehicles financed in 2025‑2028, there's a new auto‑loan interest deduction, but it’s not the same as the EV credit.

Summary at a Glance

Buyer Type

Credit Amount

Deadline

Key Requirements

New EV

Up to $7,500

Delivery by 9/30/25

Must meet sourcing + North America assembly rules

Used EV (dealer‑sold)

Up to $4,000

Delivery by 9/30/25

Under $25k cost, age ≥2 years, income limits

Commercial EV (fleet)

Up to $40,000

Service before 9/30/25

Weight & usage rules

EV Lease (via dealer)

Dealer claims credit

Lease signed before 9/30/25

Dealer passes savings via lower lease rate


Conclusion To This Tax Law Change

If you're a business or individual planning to buy or lease an EV, act now—and finish delivery before September 30, 2025 to take full advantage of the EV tax credits. After that, the law eliminates them—though a modest auto‑loan interest deduction remains for qualifying U.S.-assembled car loans through 2028. Dealers who can claim the credit before the deadline may offer tangible upfront discounts, especially on leases.

A smart EV purchase now could mean real tax savings; keep in mind  that after September 30, 2025 those incentives disappear. Please contact us at don@donthomascpa.com if you have any further questions.

 

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