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Act Fast! EV Tax Credits Disappear on September 30, 2025

 By Anthony Toronto | July 28th, 2025 | 6 min read
Purchasing an electric vehicle (EV) offers more than just environmental benefits-it can also provide significant tax advantages. Understanding these benefits thoroughly can help you make a confident decision when shopping for your next vehicle. Whether you're considering a new EV lease, a used EV, or home EV charging setups, knowing how to navigate federal incentives is essential.
Quick Links
An overview of federal tax incentives available for electric vehicles and how they can reduce your purchase cost. 
Insights into how leasing companies utilize tax credits to reduce lease payments for EVs.
Explained Information about the used clean vehicle rebate and how it benefits buyers. 

Understanding Tax Benefits When Buying an Electric Car

Electric vehicles bring more than just zero emissions to the table-they offer substantial financial incentives that can make your purchase more affordable. The federal government provides tax credits of up to $7,500 for qualifying new EVs and plug-in hybrids, a critical benefit for residents. These credits directly reduce your federal tax liability, effectively lowering the overall cost of your new electric vehicle. 
To qualify for the full federal credit, your vehicle must meet specific criteria, including battery capacity, assembly location, and price caps. IRS Vehicle Eligibility Requirements (this is a government-backed site maintained by DOE & EPA).For example, SUVs and trucks must be priced below MSRP $80,000, while other passenger vehicles have a MSRP $55,000 cap. Additionally, your modified adjusted gross income (AGI) must not exceed $150,000 (married filing jointly) or $75,000 (single filers) to be eligible. These income limits ensure the credits target consumers who are more likely to benefit from the incentive. 

Unlike rebates that reduce the purchase price upfront, the federal tax credit is claimed when you file your tax return. However, some dealers, including those at Lithia Motors, Inc, may offer ways to apply these credits at the point of sale or through leasing arrangements, making it easier to access savings immediately. 
Act Fast: Why You Should Claim Your EV Tax Credit Now 
Federal EV tax incentives were designed to promote clean driving. Recent legislative changes mean these significant savings are set to disappear, making this your final chance to save thousands on new EV or hybrid purchases. Potential Savings: Up to $7,500 off eligible new electric vehicles & Up to $4,000 off eligible used electric vehicles 
For those interested in browsing options, Lithia provides comprehensive inventories, including All New Vehicle Inventory and All Used Vehicle Inventory, featuring a wide range of electric models from Audi, Honda, BMW, Chevrolet, Ford, Hyundai, Toyota, Mercedes-Benz, KIA, GM, Subaru, CDJR, Lexus and more. 

How the $7,500 Tax Credit Applies to Leasing

Leasing a qualifying EV can be an excellent way to enjoy electric driving with lower upfront costs while still benefiting from tax incentives. While individual lessees do not claim the $7,500 federal tax credit directly, the leasing company receives this credit and typically passes the savings onto the consumer through reduced monthly payments. 

This arrangement has made leases attractive. For example, the credit can be applied as a down payment, sometimes allowing lessees to start with zero down payment aside from taxes and fees. 

It's important to verify whether the specific EV model qualifies for the credit, as eligibility can vary by trim and vehicle configuration. 

$4,000 Electric Car Rebate Explained

The $4,000 electric car rebate is a crucial incentive designed to make used electric vehicles more affordable. This rebate is part of the federal Used Clean Vehicle Tax Credit, covering up to 30% of the sale price on eligible used EVs or fuel cell vehicles, capped at $4,000. 

To qualify, the used EV must be purchased from a licensed dealer at a sales price of $25,000 or less. Buyers also must meet income limits-such as a modified AGI below $150,000 for joint filers-and cannot have claimed this credit in the previous three years. The vehicle must be at least two model years old and have a battery capacity of 7 kWh or more. 

The rebate can be applied as a point-of-sale discount at participating dealerships, reducing the immediate out-of-pocket expense. Lithia Motors, Inc provides a broad selection of used EVs including Used SUVs for Sale and Used Sedans for Sale that may qualify for this credit. 

Given the paperwork and eligibility requirements, working with knowledgeable dealership staff ensures you maximize your rebate benefits while complying with IRS guidelines.
Top Vehicles Eligible for the 2025 EV Tax Credit

We've identified 10 popular models from leading brands that qualify for the maximum savings:

Ford

Mustang Mach-E - The Mustang legacy meets modern electrification. 
  • Range: EPA-estimated 320 miles 
  • Perfect For: Performance enthusiasts, daily commuters, and families who appreciate style. 
  • Units Sold (2025): ~21,800+ 

F-150 Lightning - America’s favorite truck is now electrified. 
  • Range: EPA-estimated 320 miles 
  • Perfect For: Truck lovers, contractors, and adventure seekers needing towing and power. 
  • Units Sold (2025): ~17,600+ 
Honda CR-V Hybrid - Reliable SUV versatility with exceptional efficiency. 
  • Range (Hybrid): EPA-estimated 560+ miles total; 40 mpg combined 
  • Perfect For: Practical families, long-distance commuters, eco-conscious drivers. 
  • Units Sold (2025): ~45,000+ 

Honda Prologue - Stylish electric SUV built for families. 
  • Range: EPA-estimated 308 miles 
  • Perfect For: Family-focused drivers prioritizing safety, reliability, and sustainability. 
  • Units Sold (2025): ~16,300+
Toyota Camry Hybrid - Efficiency meets trusted reliability. 
  • Range (Hybrid): EPA-estimated 680+ miles total; 52 mpg combined 
  • Perfect For: Daily commuters, families seeking fuel savings, reliability-focused buyers. 
  • Units Sold (2025): ~34,000+ 
Toyota RAV4 Hybrid - America’s best-selling SUV—now even greener. 
  • Range (Hybrid): EPA-estimated 580+ miles total; 40 mpg combined 
  • Perfect For: Versatile families, road-trip enthusiasts, and environmentally-conscious drivers. 
  • Units Sold (2025): ~52,500+

Hyundai IONIQ 5 - Retro-inspired design, futuristic performance. 
  • Range: 318 miles 
  • Perfect For: Drivers passionate about technology, style, and ultra-fast charging. 
  • Units Sold (2025): ~19,100+ 
Hyundai Tucson Hybrid - Popular SUV with enhanced hybrid efficiency. 
  • Range (Hybrid): EPA-estimated 520+ miles total; 38 mpg combined 
  • Perfect For: Families and commuters who value comfort, space, and fuel economy. 
  • Units Sold (2025): ~27,800+ 
Audi Q6 e-tron - Luxury electric SUV with refined performance. 
  • Range: EPA-estimated 350+ miles 
  • Perfect For: Luxury buyers, families, professionals prioritizing premium driving experience. 
  • Units Sold (2025): ~11,400+ 

Audi A6 e-tron - Electrified luxury sedan, flawless performance. 
  • Range: EPA-estimated 360+ miles 
  • Perfect For: Executives, enthusiasts who desire luxury, innovation, and driving excellence. 
  • Units Sold (2025): ~9,500+ 

Want to explore the full list of vehicles that qualify for federal tax incentives? Check out the official list of eligible EVs on fueleconomy.gov 

Expert Tips to Maximize Your EV Tax Credit 
  • Act soon to secure your preferred vehicle, as inventory and incentives become limited approaching the deadline. 
  • Consider choosing vehicles with higher resale value to further maximize financial returns. 
  • Explore financing options: visit our Lithia Financing Guide to understand your best payment method.
V Tax Credit FAQs 
Q: When does the federal EV tax credit expire? 
A: The federal EV tax credit expires on September 30, 2025.

Q: Is the EV tax credit going away completely after 2025? 
A: Yes, under current legislation, the $7,500 federal EV tax credit ends on September 30, 2025. 

Q: Can used EVs qualify for a tax credit? 
A: Yes, eligible used electric vehicles qualify for up to a $4,000 tax credit until the September 2025 deadline. 

Secure Your EV Savings Today – Inventory is Limited!

Navigating electric vehicle tax credits, rebates, and incentives requires careful attention to eligibility and documentation. At Lithia Motors, Inc, we are dedicated to helping you understand and access these benefits. Our extensive inventory from brands like Tesla, Ford, Toyota, and Hyundai ensures you find the perfect vehicle tailored to your needs. 

Whether you want to explore new or used electric options, our digital inventories for All New & Used Inventory at Lithia, Used Trucks for Sale, or Used SUVs for Sale make browsing easy and convenient. 
The Future of Driving is Electric, But the Savings Won't Last! 
Lithia is America's largest automotive retailer featuring most domestic and import franchises. Our stores serve urban and rural populations throughout the United States. We are focused on providing customers with an honest and simpler buying and service experience. We believe that our local communities are our lifeblood. In addition to the employment opportunities we provide in each of our neighborhoods, we also provide contributions to charitable organizations that serve our families, friends, and customers. 

Visit your local Lithia dealership today to test drive these models, secure your incentive, and switch to electric before your chance disappears.