The Used EV Tax Credit Ended September 30 — What It Covered and What Buyers Do Now

The One Big Beautiful Bill Act (OBBBA), signed into law July 4, 2025 as Public Law 119-21, terminated both the new clean vehicle credit (Section 30D) and the used clean vehicle credit (Section 25E) for vehicles acquired after September 30, 2025. The termination was abrupt — not a phase-down — and applied to both credits simultaneously. The result was a significant surge in EV purchases in the weeks before the October 1 deadline, followed by a sharp sales drop for affected vehicles in Q4 2025. For buyers purchasing a used EV today, there is no federal tax credit available regardless of vehicle type, price, or income.

While Section 25E was active, the terms were: a credit equal to 30% of the vehicle's sale price, capped at $4,000; a maximum vehicle sale price of $25,000; the vehicle had to be at least two model years older than the year of purchase; purchases had to be from a licensed dealer; and modified adjusted gross income limits applied — $150,000 for married filing jointly, $112,500 for head of household, and $75,000 for single filers. The credit was non-refundable but could be transferred to the dealer at point of sale, reducing the purchase price directly for buyers who opted for the transfer. Unlike Section 25D, Section 25E had no carryforward provision — unused credit was simply lost.

The $25,000 price cap was the most common eligibility barrier. Used EVs from the 2022–2023 model years, including the Chevrolet Bolt, Nissan Leaf, and older Tesla Model 3 Standard Range, frequently appeared below the cap in used inventory at dealers, as did many 2020–2021 plug-in hybrids. The VW ID.4 assembled in Chattanooga, Tennessee qualified for the new vehicle credit (Section 30D) at full $7,500 while that credit was active, but used ID.4 units at dealer prices below $25,000 could also qualify for Section 25E. Used credit eligibility was determined primarily by price, vehicle age, and dealer registration with the IRS Energy Credits Online portal — not a published model-by-model list the way Section 30D operated.

The IRS's Energy Credits Online portal at irs.gov/credits-deductions/used-clean-vehicle-credit remains accessible for reference and for any dealers still processing retroactive transfers for qualifying purchases made before October 1, 2025. Buyers who purchased a qualifying used EV before the deadline and used the dealer transfer mechanism should ensure their dealer completed the IRS registration; if the credit was claimed on the buyer's tax return rather than transferred, Form 8936 covers both new and used clean vehicle credits. Amended returns for pre-October 2025 qualifying purchases remain available within the standard three-year window.

For buyers purchasing used EVs today, the financial calculus has shifted. Without a federal credit, the economics rest on vehicle price, state incentives, charging cost savings, and expected maintenance savings relative to a comparable ICE vehicle. Several states maintain used EV incentives independent of the federal program: Colorado's income-qualified used EV rebate, Connecticut's CHEAPR program, and New York's Drive Clean Rebate all cover used EVs or plug-in hybrids on state-specific terms. Buyers should verify current program availability through their state's energy office before completing a purchase — state budgets are finite and program status changes.