Trump’s Megabill Eliminates $7,500 EV Tax Credit Effective After September 2023

A significant tax and spending bill promoted by President Donald Trump recently passed in the Senate, with potential implications for electric vehicle (EV) buyers. This legislation aims to eliminate tax credits for electric vehicles within three months, specifically targeting consumers who purchase or lease EVs after September 30.

The proposed changes would remove a $7,500 tax credit for new EVs and a $4,000 credit for used EVs. Ingrid Malmgren, the senior policy director at Plug In America—a nonprofit advocating for EV adoption—encourages those interested in electric cars to act quickly.

She emphasized that if the legislation remains unchanged, the tax incentives would cease, making this summer crucial for potential EV buyers. The Senate passed the bill narrowly with a 51-50 vote, which required a tie-breaking vote from Vice President JD Vance.

Following this, the bill will move to the House for further consideration. The Senate’s timeline for eliminating the EV tax credits is notably stricter than an earlier version from House Republicans, who proposed that tax breaks would end after December 31 and exempted certain EVs from the deadline.

The Inflation Reduction Act, passed during Joe Biden’s presidency, initially provided tax breaks for EVs until 2032, aiming to increase EV ownership and reduce greenhouse gas emissions in the transport sector. Given that this sector is responsible for approximately 28% of U.S. emissions, transitioning to EVs is seen as an important step in tackling climate change.

Despite historically higher prices for EVs, the gap is narrowing. In May, the average cost of a new EV was around $57,700 compared to approximately $48,100 for gas vehicles.

Experts argue that federal tax credits have been vital in making EVs more financially competitive. Even if federal incentives are withdrawn, state and local options may still help buyers.

Malmgren advises customers to arrange for the tax credit at the point of sale rather than waiting until tax filing season.