IRS Extends Deadline for Electric Vehicle Tax Credit

The IRS has updated its website to give buyers, dealers, and automakers more time to secure the $7,500 tax credit for electric vehicles. The agency now allows taxpayers to claim the credit if they have a written binding contract in place and a payment made on or before September 30, 2025. The credit can be claimed when the vehicle is placed in service, even if it's after the deadline. This update should ease the transition for those looking to take advantage of the tax credit.

The U.S. Internal Revenue Service (IRS) has extended the deadline for claiming the $7,500 tax credit on electric vehicles (EVs), offering more time for buyers, dealers, and automakers to secure the incentive. The new guidelines, effective immediately, allow taxpayers to claim the credit if they have a written binding contract and a payment made on or before September 30, 2025. The vehicle can be placed in service after the deadline, provided the conditions are met.

Previously, the tax credit expired on September 30, 2023, but the IRS has now revised its rules to accommodate buyers who have already initiated the purchasing process. This update aims to ease the transition for those looking to take advantage of the tax credit. The change is particularly beneficial for automakers like Tesla (TSLA) and General Motors (GM), which have seen a surge in EV sales due to the incentive [1].

The new guidelines also apply to buyers who have paid for their new electric cars in the current quarter. This means that even a small down payment or a trade done before the end of the quarter will qualify the buyer for the tax credit. The dealer is required to provide a time-of-sale report to the IRS on delivery, ensuring that buyers can still claim the $7,500 subsidy even if their vehicle is delivered after September 30 [2].

While the federal EV tax credit is set to expire, states like California are considering local incentives to replace the program. In June, Governor Gavin Newsom signed Executive Order N-27-25, recommending state-funded EV and clean energy subsidies. The order aims to keep the Low Carbon Fuel Standard and provide EV buyers with rebates, vouchers, or other purchasing incentives that match the expiring federal tax credit [2].

The IRS update and potential state initiatives are significant developments in the EV market. They provide a smoother transition for consumers and automakers, ensuring that the benefits of electric vehicles continue to be accessible to a broader audience.

References:
[1] https://www.investors.com/news/7500-ev-tax-credit-irs-extended-tesla-gm/
[2] https://www.notebookcheck.net/IRS-tweaks-Tesla-Model-Y-tax-credit-expiration-deadline-as-California-mulls-federal-subsidy-compensation.1094783.0.html