If you were hoping to knock a few thousand dollars off a new or used electric vehicle with a federal tax credit, that window has closed. The One Big Beautiful Bill Act (OBBBA), signed July 4, 2025, ended the federal clean vehicle credits early. Under IRS guidance, the credits are not allowed for any vehicle acquired after September 30, 2025.
That doesn't mean everyone is out of luck. If you bought before the cutoff, you may still have a credit to claim, and if you took the credit at the dealership, you still have reporting to do. Here's how it works.
Which credits ended
Three vehicle credits were cut off on the same date. The IRS says each one "will not be allowed" for a vehicle acquired after September 30, 2025:
- New Clean Vehicle Credit (section 30D): up to $7,500 for qualifying new EVs and fuel cell vehicles.
- Previously-Owned Clean Vehicle Credit (section 25E): 30% of the sale price, up to $4,000, for qualifying used EVs priced at $25,000 or less.
- Qualified Commercial Clean Vehicle Credit (section 45W): for businesses that bought qualifying clean vehicles.
There is no replacement federal credit for buying an EV in 2026. If you're shopping for one now, price it without a federal credit in mind. Some states and utilities run their own incentives, so check those separately.
What "acquired" means, and why it matters
The cutoff turns on when you acquired the vehicle, not when you drove it home. The IRS says a vehicle is acquired when "a written binding contract is entered into and a payment has been made." A payment can be a nominal down payment or a vehicle trade-in.
So both pieces had to be in place on or before September 30, 2025:
- A written, binding purchase contract, and
- A payment (even a small deposit or a trade-in).
A refundable reservation fee with no signed contract, or a signed contract with no payment, doesn't meet the test on its own.
If you did acquire the vehicle by the deadline but took delivery later, you can still claim the credit. The IRS says you claim it when the vehicle is placed in service, even if that happens after September 30, 2025. Say you signed a contract and put $1,000 down in mid-September 2025, and the car arrived in January 2026. You'd claim the credit on your 2026 return, filed in early 2027, as long as you and the vehicle meet all the other rules.
The other rules still apply
Meeting the date test is only the first step. The usual requirements still apply to a vehicle acquired in time.
Income limits
For the new vehicle credit, your modified adjusted gross income (MAGI) can't exceed:
| Filing status | New vehicle (30D) | Used vehicle (25E) |
|---|---|---|
| Married filing jointly / surviving spouse | $300,000 | $150,000 |
| Head of household | $225,000 | $112,500 |
| All other filers | $150,000 | $75,000 |
You can use your MAGI from the year you take delivery or the year before, whichever is less. That flexibility can help if your income jumped in the delivery year.
Price caps
For new vehicles, the manufacturer's suggested retail price can't exceed $80,000 for vans, SUVs and pickup trucks, or $55,000 for other vehicles. Used vehicles must have a sale price of $25,000 or less.
If you transferred the credit to the dealer
Many buyers didn't wait until tax time. They transferred the credit to a registered dealer and got it as an instant discount or cash at purchase. If you did, you are not finished. The IRS says you must file Form 8936 and Schedule A (Form 8936) with your return for the year you took delivery.
When you transferred the credit, you signed an attestation that you expected to be under the income limit. Dealers don't verify your income. If your MAGI ends up over the limit, the IRS says you must repay the credit you transferred, as an addition to your tax for the year the vehicle was placed in service.
Here's how that can play out. Say you're single, took a $7,500 point-of-sale credit, and expected to earn about $140,000. A bonus pushes your MAGI to $160,000 in the delivery year. If your prior-year MAGI was also over $150,000, you'd owe the $7,500 back on your return. Planning for this ahead of time is much better than finding out in April.
The dealer was also required to give you and the IRS a time-of-sale report with the vehicle's VIN and other details. Keep your copy, because the information on Form 8936 should match it.
How to claim a credit you're still owed
If you acquired a qualifying vehicle by the deadline and didn't transfer the credit, you claim it on Form 8936 for the year you took delivery. A few practical points:
- It's nonrefundable. If you claim it on your return, the credit can reduce your tax to zero, but you won't get the excess back as a refund. For the used vehicle credit, the IRS notes you "can't get back more on the credit than you owe in taxes."
- Have the dealer report in hand. You'll need the VIN and the details from the seller's time-of-sale report.
- Business buyers claiming the commercial clean vehicle credit for a vehicle acquired by the deadline should coordinate with their business return. See our guide to small business deductions for related planning.
For a wider view of what else changed this year, read navigating the 2026 tax changes. If you also made energy upgrades at home, see what happened to the home energy credits.
When it's worth getting help
Most people with a straightforward pre-cutoff purchase can follow the Form 8936 instructions. It's worth a second set of eyes if you transferred the credit and your income was close to the limit, if your contract date and delivery date fall on either side of September 30, 2025, or if you're a business with commercial vehicles.
Our CPAs and Enrolled Agents can review your paperwork and make sure the credit is reported correctly as part of our personal tax preparation service. When you're ready, you can book an appointment.
Sources
- IRS: FAQs for modification of sections 25C, 25D, 25E, 30C, 30D, 45L, 45W and 179D under the One, Big, Beautiful Bill
- IRS: Credits for new clean vehicles purchased in 2023 or after
- IRS: Used clean vehicle credit
- IRS: Instructions for Form 8936 (2025)
- IRS: Topic H, FAQs about transfer of the new and previously owned clean vehicle credits
General information, not tax advice. Tax rules change and depend on your situation. Figures are for tax year 2026 unless noted; confirm current amounts at IRS.gov or talk to a Stellar Tax professional before acting.