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. If you're in the market for an electric vehicle, there are two main credits to consider. The first is the Inflation Reduction Act credit from the Biden administration, which gives you up to $7, 500 off a new electric or fuel-cell vehicle. But this credit is set to expire on September 30. The second credit comes from Trump's new law, which offers up to $10, 000 annually on loan interest for new vehicles under 14, 000 pounds that are made in the U. S. This credit is available for purchases made between 2025 and 2028. So, what's the catch? Well, the Biden credit is only available for new vehicles assembled in North America, and your income must be below $150, 000 if you're single or $300, 000 if you're filing jointly. The Trump credit, on the other hand, phases out for incomes between $100, 000 and $150, 000 for individuals, or between $200, 000 and $250, 000 for joint filers. It's also not available for fleet purchases, commercial vehicles, or leases. Now, is this the best way to save money on a car? Maybe not. The average price for a new EV is around $57, 734, even with the $7, 500 tax credit, you're still paying a premium over a gas-powered car. However, over five years, you could save on fuel costs with an EV. If you're not set on a new car, used EVs are significantly cheaper, with an average listing price about $20, 000 less than new models. Plus, you can get a $4, 000 tax credit for a used EV under Biden's legislation, but this won't qualify you for the Trump credit.