- Sales of electric cars and trucks could be scorching hot at the end of summer, according to industry analysts, as buyers race to lock in clean vehicle tax credits that expire in September.
- A lucrative loophole on leasing EVs ends Sept. 30, too.
A brand new, out-of-the-blue Sept. 30 deadline to buy an EV could be easy to miss, given all the quirky details packed into the nearly 900-page mega tax bill. But automakers aren’t about to let that happen.
An email sent by Telsa says: "Order soon to get your $7,500."
"You can get $7,500 off a qualifying Tesla vehicle at delivery with the federal tax credit, which will now expire on September 30, 2025," the email stated.
You must take delivery on or before Sept. 30 to be eligible.
Sales of electric cars and trucks, including plug-in hybrids, could be scorching hot at the end of summer, according to industry analysts, as buyers hear more promotions about why they absolutely must lock in lucrative clean vehicle tax credits that expire under what has been called the “one, big, beautiful bill.”
A lucrative loophole on leasing EVs ends Sept. 30, too.
A clean vehicle tax credit that's up to $4,000 for eligible used electric vehicles also expires Sept. 30.
Don’t kid yourself. Not every tax filer will qualify for the credit when buying a clean vehicle. The make and model and the MSRP matter. So does your income. The credits do not apply to every package offered on some electric car or truck or plug-in hybrid models.
The availability of the credit for those who buy will depend on several factors, including the vehicle's MSRP, its final assembly location, the sourcing of the critical minerals and components in the battery, and your modified adjusted gross income.
Included in the footnotes for the Tesla email: "Consult a tax professional. Not all buyers, vehicles or financing options will qualify. Terms and conditions apply."
Check out the details at FuelEconomy.gov to search for eligible vehicles. Independent websites, such as Edmunds, also list cars and trucks that are eligible for the federal EV tax credit.
Some 2025 vehicles that could qualify for a $7,500 credit when you're buying the vehicle, according to the FuelEconomy.gov list, are: the Ford F-150 Lightning Flash Trim, as well as Lariat and XLT trims; the 2025 Jeep Wagoneer S; the 2025 Tesla Cybertruck dual motor, long range and single motor; various models of the 2025 Tesla Model 3, Model X and Model Y; the Cadillac Lyriq and Optic; the Chevy Blazer EV, the Chevy Equinox EV and the Chevy Silverado EV.
Among these models, though, you’re limited to a vehicle with an MSRP of $80,000. Ask the dealer whether the specific car or truck you’re buying qualifies. Not every version of a model listed on the FuelEconomy.gov website qualifies.
For a consumer to qualify for a clean vehicle credit, the manufacturer suggested retail price can't exceed $80,000 for vans, sport utility vehicles and pickup trucks. It cannot exceed $55,000 for other vehicles.
Higher income households won’t qualify for the credit when buying an EV. Your modified adjusted gross income may not exceed $300,000 for married couples filing jointly; $225,000 for heads of households; and $150,000 for all other filers.
You can use your modified AGI from the year you take delivery of the vehicle or the year before, whichever is less, according to the Internal Revenue Service. If your modified AGI is below the threshold in one of the two years, you can claim the credit.
The EV or plug-in hybrid must be bought for your own use, not for resale. You must use it primarily in the United States.
The bulk of EVs these days are leased — and for good reason when it comes to the complicated tax credit.
A loophole in the tax credit, which was part of the Inflation Reduction Act of 2022, gave dealers an edge for promoting attractive leases for new EVs and plug-in hybrids, especially as many new clean vehicles were introduced. The driver cannot claim the clean vehicle tax credit in this case but can likely benefit from a better lease deal.
It's one way many are finding lower monthly payments for higher priced vehicles, too.
Leased electric vehicles are classified as "commercial vehicles," which means that they're eligible for the full federal clean vehicle credit without meeting strict battery and sourcing requirements. So, you might be able to lease an EV that wouldn't qualify for any credit at all if you bought it.
In these cases, the tax credit belongs to the leasing company, often the automaker's captive finance arm. Some or all of that savings could be passed along to the buyer through a well-positioned lease deal.
Stephanie Valdez Streaty, director of industry insights at Cox Automotive, told the Detroit Free Press — part of the USA TODAY Network — that dealers are likely to feature attractive lease deals in the next two and a half months before the Sept. 30 deadline hits, which puts an end to the leasing loophole.
She noted that only about 20 electric and plug-in hybrid models are eligible for the clean vehicle credit of up to $7,500 for consumers. Thanks to the EV leasing loophole, she explained, virtually any EV — regardless of price or country of origin — can qualify for the commercial clean vehicle tax credit, making it far more accessible than the consumer EV credit.
The consumer who opts to lease the EV doesn't have to worry about any income limits affecting whether you qualify for the clean vehicle credit, she noted. And the leasing loophole gets around MSRP requirements or where batteries are produced or components are sourced.
In April, 60% of all new EV transactions were lease deals, according to Cox Automotive data.
Ivan Drury, director of insights at Edmunds, said almost all offers involving leasing are going to be the most favorable deals, given that they allow for more vehicles to benefit from tax breaks regardless of assembly location or battery sourcing requirements.
Automakers and dealers already are having trouble moving EVs off the lot now, Drury said.
"EVs went from some of the hottest products on the market back in 2022 to sitting on the lot for months on end, and it has been this way for nearly two years," Drury said.
Selling EVs could get even tougher once the clean vehicle tax credit disappears.
"Any reduction in incentives could lead to further issues once the tax credit deadline approaches, especially since many automakers have incentives stacked on top of the tax credit — with the tax credit doing most of the heavy lifting," Drury said.
It is hard to say what happens beginning in October. Will automakers move so many EVs off lots by Sept. 30 that they no longer need to offer super-deep discounts? Or will brands with bloated EV inventories now still need to offer really good deals to unload metal in the fall?
Drury said in some cases it might be possible to see current inventories reduced to a more manageable volume, especially as 2026 model year planning and forecasting will take into account reduced sales.
"This could easily make the next few months one of the best and last times to score a deal on an EV," Drury said.
Valdez Streaty, at Cox Automotive, expects solid growth in EV sales in the third quarter, as buyers act ahead of the Sept. 30 deadline for the expiring tax credit.
Not surprisingly, she predicts that EV sales then will drop off in the fourth quarter, as the electric vehicle market adjusts to a new reality where buyers no longer receive federal tax breaks. Some states, like Colorado, currently offer tax breaks for EV purchases. But even Colorado's smaller tax break is set to be reduced as of Jan. 1, 2026.
EV sales in the second quarter were down 6.3% year over year, according to a report issued July 14 by the Cox Automotive Kelley Blue Book team. Some of that decline is attributed to some buyers who rushed ahead to buy in the first quarter, as many anticipated that President Donald Trump would ultimately put end to EV tax credits for consumers.
During the second quarter, consumers bought 310,839 new EVs in the United States, down from 331,853 in the same period in 2024, according to the well-known provider of information about the value of new and used cars.
Total EV sales through the first half of 2025 set a record at 607,089, up 1.5% year-over-year, according to Cox Automotive Kelley Blue Book.
Right now, buyers are looking at healthy inventories for EVs and strong sales incentives, according to experts.
Ford Motor Co., for example, has extended a program called the "Ford Power Promise" that offers a free home charger and complimentary standard installation until Sept. 30. The offer applies to the purchase or lease of a new Ford F-150 Lightning, Mustang Mach-E or E-Transit Cargo Van.
One doesn't have to look far to find some sort of deal on EVs.
"Manufacturers and dealers are using this opportunity to create a sense of urgency to buy now while this (tax) incentive is still in place," Valdez Streaty said.
Overall, sales incentives on EVs in the second quarter were more than 10% of the average transaction price. In June, average EV incentives from manufacturers reached an all-time high of 14.8% of average transaction prices, hitting nearly $8,500, according to Kelley Blue Book.
These incentives are in addition to any available tax credit.
In June, the average transaction price was $56,910 for a new EV, according to Kelley Blue Book.
Todd Szott, whose family owns dealerships in Michigan, said more buyers are getting motivated to shop for EVs by the Sept. 30 deadline. The dealership is promoting several lease deals, including $329 a month for 24 months on a 2025 Dodge Charger R/T and $299 a month for 24 months for a 2024 Wrangler, 4-door Sport 4xe.
The dealership is also promoting a $399 a month lease for 36 months on a 2025 Ford Mustang Mach-E.
All lease deals are plus sales tax and state fees, and the first payment is due at signing.
Almost all the dealership's customers lease electric vehicles or plug-in hybrid electric vehicles, Szott said.
"The federal tax credit goes to the leasing company and is passed on to the customer in the form of a great lease deal," Szott said.
He noted that more makes and models qualify for the federal tax credit through leasing because the qualifications to get the credit through leasing are less stringent.
Many drivers also benefit from leasing, he said, because EV and PHEV technology will improve and change in three years, so leasing for about three years makes sense.
He sells Ford, Chrysler, Jeep, Dodge, Ram and Toyota vehicles through Szott Auto Group in White Lake, Highland Township, Holly, Waterford and New Hudson.
If you're tempted to buy or lease to beat the Sept. 30 deadline, experts say do your research and figure out your options now. If you plan to buy, talk to your bank or credit union and see what kind of interest rate on a car loan you'd qualify to get.
Pushing anything to the last minute can cause processing errors, warns Mike Mader, Baker Tilly’s dealership industry practice leader. And paperwork is key if you're buying an EV and expecting a tax credit. Remember, you cannot claim a federal income tax credit on your tax return if you lease the EV.
Don’t think things will just magically work out at tax time. Some taxpayers faced enormous headaches this year when dealing with the credit on their 2024 tax returns filed this year.
The federal government notes that Clean Vehicle Tax Credits must be initiated and approved at the time of sale. Buyers should obtain a copy of the confirmation from the Internal Revenue Service that a “time-of-sale” report was submitted successfully by the dealer.
The IRS has an online portal for dealers to submit time of sale reports for EVs sold. Dealers must submit time-of-sale reports within a three-day period.
The National Automobile Dealers Association told the Detroit Free Press that some earlier tax glitches have been worked out. “NADA worked with the IRS to resolve the systemic issues with the portal earlier this year and those fixes have remained successful,” according to NADA spokesperson Amy Wright.
“Anecdotally, some dealers have reported an occasional, individual problem, but that should not deter consumers from purchasing an EV. There is no reason to believe there will be upcoming problems.”
Many dealers, Wright said, offer the $7,500 credit at the time of purchase and that will remain unchanged until Sept. 30. The buyer can choose to take the credit upfront or claim it later on their tax return. You need the proper paperwork in either case.
While a bit more than two months isn't a long lead time, the NADA said it was able to help secure a longer phaseout of the tax incentive through Sept. 30 instead of seeing the credit hit a dead stop even earlier.
Contact personal finance columnist Susan Tompor: stompor@freepress.com. Follow her on X @tompor.
