California is moving to backfill at least some of the lost $7,500 federal electric vehicle tax credit that was killed last year by President Donald Trump‘s administration and Congress. But the state is planning to limit its new incentive to first-time EV buyers.
As first reported by USA TODAY, California plans to spend $200 million in state money to offer an “on the hood” electric vehicle tax rebate that would offer instant discounts to EVs in the state that is home to most plug-in models in the nation.
But the California Air Resources Board, which regulates air pollution and auto emissions in the nation’s most populous state, said the new incentive program will be available only to first-time EV buyers. The agency said other limits will include caps on the price of the electric car that will be similar to restrictions that were put in place for federal credit in a 2022 law.
California is home to the largest percentage of car buyers who opt for electric cars.
According to the Alliance for Automotive Innovation, which lobbies in Washington for most major automakers, EVs and hybrid cars composed 26.3% of new light-duty vehicle registrations in California in the third quarter of 2025, which is the most recent data the group has made publicly available. Colorado, Washington and Washington, DC were the only other states above 20% market share in the third quarter of 2025.
Carmakers have lamented the loss of the federal incentive for EVs, and several have slashed plans to build future electric models in light of the shift in the federal government’s support for the technology.
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Under its previous Clean Vehicle Rebate Project, which ran from 2013 to 2024, California spent $1.49 billion to give out rebates for more than 586,000 electric vehicles. CARB said the previous round of EV tax credits had the following environmental benefits:
California plans to replicate limits on EV prices that were included in the prior federal tax credit.
The limits will be as follows:
CARB said participating automakers in its rebate program will be required to match the state’s contribution, which the agency said would effectively double the incentive available for EV buyers.
CARB said its decision to limiting eligibility to first-time EV buyers will help “expand the market by introducing new consumers to (Zero Emission Vehicle) technology.”
“Research shows that once consumers make the switch to ZEVs, they typically don’t go back to dirty gasoline or diesel vehicles,” the agency said.

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