The end of $7500 EV tax credit is confirmed

On Thursday, a massive tax and spending cut bill was approved by Congress, marking the end of $7500 tax credit for customers on buying or leasing an electric vehicle (EV) by the third quarter of this year. Now that the bill has been passed and it will soon be on President Donald Trump’s desk for a signature and turn into a law.

The bill means that $7500 credit for new and $4,000 credit for used EVs will end together on September 30, 2025. This new spending cut also includes rooftop solar subsidies of 30%, which will be slashed on December 31, 2025.

This removal will impact the EV purchases, which are currently more affordable thanks to the tax benefits. For example, the Tesla Model Y RWD Long Range version is priced at $44,990 (as of today), but the tax credit brings it down to $37,490.

Congress approved $7,500 EV tax credit under the Energy Improvement and Extension Act in 2008. The credit was decided to end once a manufacturer reached a certain number of vehicle sales, initially 250,000, and was revised to 200,000 for each company. It was phased out in the following year, when Tesla achieved this cap, followed by other car makers. This ceiling was removed in 2022, adding new and used EV credits as well as other clean energy subsidies through 2032.

The Electrification Coalition, an EV advocacy group, reacted to the bill, saying, “As EVs secure a growing share of the global automotive market, it is obvious that the future of transportation is electric; this bill forfeits America’s role in that future to China.”.

However, White House officials are targeting spending cuts to save billions of dollars a year through this bill. Subsequently, this step will slow down the EV market growth, proving a negative impact on vehicle makers and forcing them to cut jobs related to such vehicles, contrary to Trump’s claims about creating or saving auto jobs.

This new bill also ends penalties for automakers that fail to meet federal Corporate Average Fuel Economy (CAFE) standards. Specific information about specific guidelines on the EV credit phase-out is yet to arrive.