If you've been waiting to buy an electric vehicle, hoping to claim the generous federal tax credits that have helped millions of Americans afford EVs, the wait is over—and not in a good way. As of September 30, 2025, the federal EV tax credits are no more. The $7,500 credit for new electric vehicles and the $4,000 credit for used EVs, both products of the Inflation Reduction Act, have been eliminated.

For 2026 car buyers, this represents a significant shift. The credits, which could be taken as point-of-sale discounts at dealerships starting in 2024, had become a major factor in EV purchasing decisions. Their elimination changes the calculus for anyone considering an electric vehicle purchase.

What Happened to the EV Credits

The Inflation Reduction Act of 2022 created the Clean Vehicle Credit for new EVs and the Previously-Owned Clean Vehicle Credit for used EVs. These credits were designed to accelerate EV adoption and reduce transportation emissions.

However, the One Big Beautiful Bill Act, enacted in July 2025, terminated these credits effective September 30, 2025. Vehicles purchased after that date are not eligible for federal EV tax credits.

"The end of the federal EV tax credit represents a fundamental shift in the economics of electric vehicle ownership. For some buyers, EVs no longer make financial sense without the subsidy. For others, the technology has advanced enough that they're competitive on their own merits."

— Automotive industry analyst

The Limited Exception

There's one narrow exception: if you acquired a vehicle on or before September 30, 2025—demonstrated by a binding written contract and payment—you can still claim the credit even if you didn't take delivery until later. But for anyone who didn't act before the deadline, the credits are gone.

What This Means for 2026 Car Buyers

Higher Effective Prices

The most obvious impact is on pricing. An EV that cost $45,000 with a $7,500 credit effectively cost $37,500. Without the credit, buyers pay the full price. For many shoppers, this eliminates the price advantage EVs had achieved over comparable gas-powered vehicles.

Changed Competitive Dynamics

Automakers are responding in different ways. Some are cutting prices to maintain competitiveness without subsidies. Tesla, for example, has aggressively reduced prices on several models. Other manufacturers are focusing on cost reduction through manufacturing efficiencies.

The used EV market faces particular challenges. Without the $4,000 credit, used EVs lose a significant value proposition. This could accelerate depreciation on existing electric vehicles as demand softens.

What Incentives Remain

EV Charger Credit (Until June 30, 2026)

One federal incentive survives—for now. The tax credit for EV charging equipment remains available for purchases made by June 30, 2026. The credit covers up to 30% of hardware and installation costs, with a maximum of $1,000 for home chargers.

If you're planning to buy an EV, installing a home charger before the credit expires can recoup some of the lost federal benefit.

State and Local Incentives

Many states maintain their own EV incentive programs, which continue regardless of federal policy changes:

  • California: The Clean Vehicle Rebate Project offers up to $4,500 for new EVs for qualifying low-income buyers
  • New York: The Drive Clean Rebate provides up to $2,000 for new EV purchases
  • Colorado: State tax credits of up to $5,000 remain available
  • New Jersey: Offers exemption from sales tax for EV purchases

Check your state's current programs—they can significantly offset the loss of federal credits.

Utility Company Rebates

Many electric utilities offer rebates for EV purchases or home charger installations. These vary widely by location and utility, but can range from a few hundred dollars to over $1,000. Contact your utility company to learn what's available.

Should You Still Buy an EV?

The end of federal credits doesn't mean EVs are a bad choice—it means the decision requires more careful analysis. Consider these factors:

Total Cost of Ownership

Even without credits, EVs often have lower total cost of ownership due to:

  • Fuel savings: Electricity is typically cheaper than gasoline per mile driven
  • Reduced maintenance: EVs have fewer moving parts and don't need oil changes
  • Longer brake life: Regenerative braking reduces brake wear

Over 5-7 years, these savings can partially or fully offset the higher purchase price.

Charging Infrastructure

The charging network continues to expand rapidly. If you have convenient home charging and your driving patterns fit EV range capabilities, the experience can be seamless. But if you rely heavily on public charging or regularly drive beyond your vehicle's range, factor in the time and cost implications.

Your Driving Patterns

EVs make the most sense for drivers who:

  • Can charge at home overnight
  • Drive primarily in urban or suburban settings
  • Have predictable daily mileage within the vehicle's range
  • Value quiet, smooth acceleration

They're less ideal for those who frequently take long road trips, lack home charging access, or need maximum flexibility.

The Manufacturer Response

Automakers are adjusting to the post-credit environment in several ways:

Price Reductions

Expect continued aggressive pricing from EV manufacturers seeking to maintain market share. Tesla has already demonstrated willingness to cut prices repeatedly; other manufacturers are likely to follow.

Lease Incentives

Leasing may become more attractive relative to purchasing. Manufacturers can subsidize lease payments in ways that partially replace the lost tax credit, particularly for models they're trying to move.

Focus on Lower-Cost Models

The industry is accelerating development of more affordable EVs. Models targeting the $25,000-$30,000 price point are in development from multiple manufacturers, with launches expected in 2026 and 2027.

The Bottom Line

The end of federal EV tax credits marks the end of an era in which government policy heavily subsidized electric vehicle adoption. For 2026 car buyers, the decision to go electric must now stand on its own merits—total cost of ownership, environmental preferences, driving experience, and practical considerations around charging.

For some buyers, EVs will still make sense. The technology has matured dramatically, ranges have extended, and charging infrastructure has improved. For others, the math no longer works without subsidies.

The key is running the numbers for your specific situation. Calculate total ownership costs over your expected holding period, factor in available state incentives, and make an informed decision. The EV revolution continues—it just looks different without Uncle Sam writing part of the check.