The clock is ticking for American consumers hoping to take advantage of federal electric vehicle (EV) tax credits, as the $7,500 incentive is set to expire on September 30, 2025. This looming deadline is sparking a frenzy among buyers and dealers alike, with the Internal Revenue Service (IRS) issuing fresh guidance to clarify how last-minute shoppers can still secure the coveted credits—even if their new EV won’t actually be delivered until after the cutoff date. It’s a rare moment of clarity in a policy landscape that’s been anything but predictable.
On August 21, 2025, the IRS released new instructions that could prove a lifeline for many. According to NPR, the agency said that buyers will be treated as having ‘acquired’ a qualifying vehicle if they enter into a binding written contract and make a payment—such as a deposit or trade-in—before September 30. This is a notable shift from previous rules, which required vehicles to be delivered and placed in service by the deadline. Now, so long as the paperwork and payment are in order, buyers can claim the $7,500 new clean vehicle credit under section 30D, the $4,000 previously owned clean vehicle credit under section 25E, or the $7,500 commercial EV credit under section 45W—even if the car itself arrives later. The credit, however, can only be claimed once the vehicle is delivered and the dealer provides a time-of-sale report.
“A binding written contract signed on or before September 30, 2025, together with a payment, will establish that acquisition occurred before the termination date,” the IRS explained. For buyers ordering a vehicle from out of state or waiting on a model that’s yet to be manufactured, this ‘wiggle room’ could make all the difference. Andy Phillips, vice president of the Tax Institute at H&R Block, told NPR that this flexibility is especially meaningful for those who might otherwise miss the deadline due to shipping delays or production backlogs.
The urgency is palpable. Cox Automotive reported that new EV sales were up almost 20% year-over-year in July, while used EV sales jumped a staggering 40%. Stephanie Valdez Streaty of Cox predicted that “urgency is likely to remain high” as the tax credits near expiration, with strong sales expected through the end of September. Yet, as Jessica Caldwell of Edmunds pointed out, “I don’t think a lot of consumers are necessarily aware this is happening,” suggesting that some buyers may find themselves disappointed if they miss the window.
The IRS’s new guidance is consistent with previous transitions in tax credit policy. Sean Tucker, lead editor at Kelley Blue Book, noted that the agency had used similar language after the Inflation Reduction Act was passed, basing eligibility on contract date rather than delivery in response to shifting rules. Lawmakers, too, had signaled during debates over the One, Big, Beautiful Bill Act (OBBBA) that they intended binding contracts to count as purchases for credit purposes.
The OBBBA, signed into law on July 4, 2025, marked a turning point for clean-energy incentives. Not only does it accelerate the phase-out of EV tax credits, but it also sets expiration dates for a host of other programs: the Alternative Fuel Vehicle Refueling Property Credit under section 30C will expire June 30, 2026; credits for energy-efficient home improvements and residential clean energy will end for expenditures made after December 31, 2025; and the New Energy Efficient Home Credit (section 45L) will terminate for homes acquired after June 30, 2026. It’s a broad rollback that’s left both environmentalists and automakers recalibrating their plans.
Dealers, meanwhile, are racing to clear inventory before the credits vanish. According to InsideEVs, TikTok user Amanda (@themanidiway) reported that dealerships are now “willing to take a loss on these vehicles just to get them off their lot.” She explained that the removal of the $7,500 and $4,000 tax credits is likely to make EVs “extremely unaffordable” for many drivers, pushing dealers to offer steep discounts while the incentives last. Amanda herself negotiated $22,000 off an Audi A6 e-tron premium plus lease, leveraging her knowledge of the tax credit’s expiration. “I leased it & am very much enjoying all the features!” she told InsideEVs.
Leasing, in particular, has become a hot ticket. Bloomberg noted that before the incentives expire, EV makers are “rushing to grab customers with affordable leasing deals.” Some of these are almost too good to believe: in Colorado, qualified residents could lease a Fiat 500e with zero down and zero monthly payments (aside from taxes and fees), provided they had a credit score of 700 or higher. Even luxury models like the Mercedes-Benz EQB have been available for as little as $352 a month for 2024 versions, while the Hyundai Ioniq 6 offered leases at $169 per month with $4,000 down for a 24-month term. But these deals are fading fast. Lease prices for the Honda Prologue, for example, have more than doubled from $239 to $599 per month between the 2024 and 2025 models, with down payments soaring as well.
For buyers, navigating the requirements can be tricky. The $7,500 credit for new vehicles comes with strings attached: the car must be made in North America, meet certain price caps, and contain a specified percentage of battery minerals and components from the U.S. or allied countries. There are income limits, too—$150,000 for individuals or $300,000 for married couples. Used EVs at least two years old and sold for under $25,000 can qualify for a $4,000 credit. Leasing remains the one area with fewer restrictions, as the $7,500 incentive can be applied to any EV lease, regardless of price, manufacturing location, or buyer income—a loophole that’s delighted automakers but frustrated critics of the policy.
California regulators are already considering how to fill the gap once federal credits expire. The California Air Resources Board has proposed offering $7,500 credits for new EVs and $4,000 for used EVs, but any such program would depend on available state resources. Whether other states follow suit remains to be seen.
The political backdrop is impossible to ignore. In June, former President Trump commented on the end of EV tax credits, telling reporters, “A lot of people love electric. They love Tesla. I like Tesla, and I like others too, but I also like combustion engines.” The OBBBA’s passage and the rollback of incentives reflect a broader shift in federal priorities, leaving the future of EV adoption in the hands of states, automakers, and, of course, consumers.
With the September 30 deadline fast approaching, one thing is clear: the era of generous federal EV tax credits is drawing to a close. For those hoping to cash in, there’s still time—but not much. The coming weeks will reveal just how many Americans seize the opportunity, and how the industry adapts when the incentives finally disappear.
