Senate Pushes to End EV Tax Credits by September, Sparking Rush and Climate Concerns

A new tax-and-spending bill, strongly backed by former President Donald Trump and passed by the Senate, proposes the elimination of federal tax credits for electric vehicles (EVs) within three months. The legislation would cut off $7,500 credits for new EVs and $4,000 credits for used ones after September 30, 2025.

The bill passed the Senate narrowly, 51-50, with Vice President JD Vance casting the tie-breaking vote. It now moves to the House of Representatives, where Republicans hope to get it to the president’s desk by July 4.

Senate Bill Fast-Tracks EV Credit End, Threatening Climate and Affordability Goals

The Senate’s version of the bill accelerates the expiration of EV tax credits compared to an earlier version passed by the House. The House’s “One Big Beautiful Bill Act” proposed ending the incentives after December 31 and included exceptions for certain EVs. In contrast, the Senate bill offers a tighter deadline, giving consumers just until the end of September to act. EV advocates warn that this timeline pressures buyers to finalize purchases or leases quickly to benefit from the current incentives.

The federal EV tax credits were introduced under the Inflation Reduction Act signed by President Joe Biden, intended to run through 2032. These credits were designed to make EVs more affordable and reduce greenhouse gas emissions from the transportation sector, which contributes about 28% of total U.S. emissions.

While EVs still produce some emissions during manufacturing and charging, they are significantly cleaner than gasoline-powered vehicles, according to MIT researchers. Removing the credits could slow the transition to cleaner transportation.

Shrinking EV-Gas Price Gap Makes Tax Credits Crucial Before September Deadline Hits

Electric vehicles have traditionally been more expensive than their gas-powered counterparts, but that price gap is closing. As of May, new EVs averaged around $57,700, compared to $48,100 for gas vehicles, while used EVs cost about $36,000—only slightly more than their gas equivalents. Tax credits help bridge that gap and accelerate affordability. University of Michigan researchers have emphasized that such subsidies are key to helping EVs reach price parity with gasoline cars more quickly.

With the potential expiration date looming, EV advocates like Ingrid Malmgren of Plug In America urge consumers to act quickly. She advises buyers to secure their vehicles before September 30 to qualify for the credits and to opt for the tax break at the point of sale, rather than waiting to claim it on their tax return. Even if the federal credit ends, some state and local incentives may remain available, helping to cushion the financial blow for potential EV buyers.