With Donald Trump’s return to the White House, sweeping changes are underway in U.S. economic policy—including the potential rollback of tax credits that have supported the growth of electric vehicle (EV) adoption.
One of the key programs under review is the federal electric vehicle tax credit, introduced in 2008 as part of the Emergency Economic Stabilization Act. This initiative, known as Section 30D of the Internal Revenue Code, offered up to $7,500 in tax credits for qualifying new EV purchases to promote cleaner transportation options.
How the EV Tax Credit Currently Works
Until now, the EV tax credit has evolved to keep pace with the growing electric vehicle market:
- Initially, credits were phased out once a manufacturer sold 200,000 EVs. Tesla and GM reached that threshold in 2018 and 2020.
- The Inflation Reduction Act of 2022 removed this cap, allowing more consumers to qualify.
- It also introduced benefits for used EVs, as well as tax credits for home charging infrastructure.
As of now:
- New EVs can qualify for up to $7,500.
- Used EVs can receive up to $4,000.
- Home chargers installed before 2025 are eligible for up to $1,000.
To qualify, new vehicles must have:
- A battery of at least 7 kWh.
- Final assembly in North America.
- A price cap of $80,000 for SUVs/pickups and $55,000 for sedans.
For used EVs:
- The vehicle must be at least two years old.
- It must cost less than $25,000.
- Buyers must meet income limits: $300,000 for couples, $225,000 for heads of household, and $150,000 for singles.
How to Claim the Credit
Buyers claim the credit by:
- Filing IRS Form 8936 for EVs.
- Submitting Form 8911 for residential chargers.
- Obtaining the credit through IRS-registered dealerships (who provide Form 15400) or as an instant discount at the time of sale, starting in 2024.
However, the credit is nonrefundable, meaning lower-income taxpayers may not receive the full benefit if they owe less in taxes.
Proposed Elimination Under Trump’s Economic Agenda
The Trump administration has proposed eliminating the EV tax credits entirely as part of its broader “One Big, Beautiful Bill,” introduced in May 2025. The bill would:
- Eliminate the $7,500 credit for new EVs and the $4,000 credit for used EVs after 2025.
- Reintroduce the 200,000-unit cap for manufacturers.
- Remove credits for EV chargers.
- Impose a new $250 annual fee on electric vehicle owners.
The administration argues that such credits distort the market and prefers to redirect those funds into general tax cuts.
What Would the Impact Be?
According to a study from Princeton University, EV sales could fall by 40% by 2030 without federal incentives. Models like the Chevrolet Equinox EV could see price jumps of over $7,000. Harvard researchers warn this policy could lead to 49 million more tons of carbon emissions by the end of the decade.
Industry groups, including the Alliance for Automotive Innovation, which represents 97% of major automakers, have voiced strong opposition to the rollback, citing global competitiveness risks. U.S. states with major EV investments—such as Ohio, Georgia, and Michigan—have raised concerns about the potential impact on jobs and manufacturing.
What’s Next?
If the bill passes, the elimination would take effect after December 2025. For now, consumers can still claim EV credits under current rules—but time may be running out.
