Car Tax Credits: A Quick Guide for Buyers

The U.S. is offering some sweet deals on car tax credits, but you need to act fast.

Electric Vehicle Credits

If you're in the market for an electric vehicle, there are two main credits to consider:

1. Inflation Reduction Act Credit (Biden Administration)

• Up to $7,500 off a new electric or fuel-cell vehicle.
• Expires on September 30.

2. Trump's New Law

• Up to $10,000 annually on loan interest for new vehicles under 14,000 pounds made in the U.S.
• Available for purchases made between 2025 and 2028.

What's the Catch?

• Biden Credit:
• Only for new vehicles assembled in North America.
• Income limits:
• $150,000 for single filers.

• $300,000 for joint filers.

• Trump Credit:
• Phases out for incomes between:
• $100,000 and $150,000 for individuals.
• $200,000 and $250,000 for joint filers.
• Not available for fleet purchases, commercial vehicles, or leases.

Is This the Best Way to Save?

• Average price for a new EV: $57,734.
• Even with the $7,500 tax credit, you're still paying a premium over a gas-powered car.
• Over five years, you could save on fuel costs with an EV.

Used EVs: A Cheaper Alternative

• Used EVs are significantly cheaper, with an average listing price about $20,000 less than new models.
• $4,000 tax credit for a used EV under Biden's legislation (but this won't qualify you for the Trump credit).