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President-elect Donald Trump, among his many promises, promised to eliminate federal tax credit for electric vehicles.
The $7,500 rebate, which puts electric vehicles within reach of many Americans, could be under attack next year as Trump looks for ways to pay for other initiatives, such as expansion of the Law on Tax Reduction and Employment.
“The expectation is that this tax credit could disappear,” said Ingrid Malmgren, senior policy director for the Plug In Americaa non-profit organization that advocates for the adoption of EVs.
There are still many questions about how and when the EV tax credit might change, but experts say there are a few precautions you can take now if you’re in the market for an EV.
What is the EV Tax Credit?
The current version of the EV tax credit was enacted during the Biden administration as part of the Inflation Reduction Actand expanded the existing credit that was originally created in 2008.
New electric vehicles may qualify for a full credit of $7,500 or a partial credit of $3,750 (subject to a few rules, which we’ll get to later). There is also a similar tax credit of up to $4,000 for used electric vehicles.
Unlike the original tax credit, which required you to pay full price and then claim the rebate on your tax return, you can now claim the rebate at the point of sale, right at the car dealership.
What types of vehicles qualify for the EV tax credit?
This is where those rules come in.
To qualify for the full $7,500 tax credit, a new electric vehicle must cost less than $80,000 for vans, SUVs and trucks. All other EVs should cost less than $55,000.
A qualifying EV must also source at least 40% of the “critical minerals” in its battery from the US or a country that has a free trade agreement with the US. And at least 50% of EV battery components must be manufactured or assembled in the US or a country that has a free trade agreement with the US. The EV must also “pass final assembly” in North America (USA, Mexico or Canada).
And finally, there are income limits that you must meet in order to take advantage of the loan. For married couples, the limit is $300,000 per year. For heads of households, the upper limit is $225,000. And for everyone else, the limit is $150,000 in annual income.
Right now, these rules are being relaxed list of qualified vehicles which includes many different models in nine car brands. List is expected to grow over time as vehicle manufacturers begin to build domestic supply chains to meet battery and assembly requirements.
Watch this: Expert vs. Artificial Intelligence: Is Now the Time to Buy an Electric Vehicle?
What did Trump say about the tax credit for electric vehicles?
The Trump administration signaled in November that it intended to eliminate the tax credit for electric vehicles, according to Reuters. The Trump campaign did not respond to CNET’s request for comment.
Despite that Trump’s alliance with Tesla CEO Elon Musk, the incoming president has historically not supported electric vehicles, Malmgren said.
While nothing is certain, “people definitely have their ear to see what’s going to happen in 2025,” said Marty Gennusa, a certified public accountant at Wagner, Ferber, Fine and Ackerman.
While the electric vehicle tax credit can be seen as a liberal policy that benefits progressive electric vehicle drivers, Malmgren said the incentives built into the Inflation Reduction Act have spurred huge investments in the domestic production of electric vehiclesespecially in red states, which could motivate Trump to keep the policy in place.
Trump doesn’t have the sole power to end the tax credit anyway. The EV tax credit is part of the Inflation Reduction Act, which Congress passed in 2022. Changes would require an act of Congress.
“It’s going to be a real endurance test” to see if Congress will roll back those policies, Malmgren said. “It is not popular among voters to give something and then take it away.”
You probably shouldn’t buy an EV just because there’s a possibility that the incoming Trump administration could eliminate the tax credit.
Should you buy an EV before the tax credit ends?
Don’t let politics make your financial decisions for you, but if you’ve already decided to get an EV and are deciding whether to buy it sooner or later, it could give you a better chance of getting a tax credit, experts say.
That’s for two reasons, Malmgren said. The first is the risk that the EV tax credit will end in 2025. The second is that the battery requirements for the credit will tighten next year, which could reduce the list of eligible vehicles.
Gennusa, however, is skeptical that Trump would eliminate the credit as soon as he takes office next year. “There are some bigger agenda items for the Trump administration,” he said. “I wouldn’t say it’s absolutely inevitable.”
Either way, Malmgren encourages future electric vehicle drivers start leasingwhich still gives you access to the tax credit. It’s also a low-commitment way to try out your first EV.
That being said, don’t run and panic – buy a new car only because of the tax credit. A car is a big purchase and you want to make sure you can afford it. The tax credit is a great discount, but don’t put yourself in a hole just to take advantage of it.
What would the end of the electric vehicle tax credit mean for leasing?
If you already have an EV lease with a tax credit, you don’t need to worry. Because you are locked into the contract, it will not be affected by any future changes to the tax code.
This is another reason you might want to lock in your lease before the end of 2024: It would insulate you from changes to the tax credit over the next few years.
But also be aware of the waiting period for some EV models, Gennusa said. Even if you walk into a dealership today, you may have to wait a few months to get your car.
