Anyone who is even remotely considering getting a new car cannot help but notice that the Sept. 30 deadline for snagging a tax credit of up to $7,500 on a qualifying, new electric vehicle is right around the corner.
The deadline is everywhere you look, including auto websites and ads. Some dealers are running banner headlines on their sites proclaiming: “Plug in before it powers down.”
But here’s a new twist: It’s possible that you might — emphasis on the word “might” — not need to take delivery by Sept. 30. Just get a deal done in writing with money down to buy the qualifying EV by Sept. 30, according to a tidbit in a new Internal Revenue Service post.
Potential buyers originally were told that they must take delivery of that electric car or truck or plug-in hybrid model on or before Sept. 30 to be eligible for the lucrative tax credit.
On Aug. 21, though, the IRS indicated that a vehicle would be viewed as “acquired” if the buyer has “a written, binding contract” and made a payment on or before Sept. 30. A payment includes a nominal down payment or a vehicle trade-in.
The IRS noted that the clean vehicle credit could be claimed even if the vehicle is placed in service after Sept. 30. We’re talking about a key change here.
“Taxpayers should receive a time of sale report from the dealer at the time they take possession or within three days of taking possession of the vehicle,” the IRS stated in a newly issued “frequently asked questions” update.
We have tax rules, of course, and then we have what’s likely to be reality.
Unfortunately, buying now and taking delivery after Sept. 30 is a tax tip that sounds straightforward. Yet, frankly, car buyers could end up frustrated if they drag their feet too far into September to do an EV deal.
Days after the IRS issued its FAQ, some auto dealers were still asking attorneys to figure out how enabling a consumer to take a late delivery could actually work without running afoul of other rules, including deadlines for state title and registration.
“It’s clear cut as far as the IRS is concerned,” said Dave Katarski, chief operating officer for Feldman Automotive Group.
“I don’t necessarily know how to put the puzzle together for the consumer yet,” Katarski told the Free Press on Aug. 28.
Late in August, he said, the objective continued to be to move metal off the lots by Sept. 30.
Theoretically, though, Car and Driver magazine notes online: “Automakers should also be able to leverage this rule to use the tax credit as an incentive to sell as many EVs as possible before the end of September, as long as the customers are willing to wait for delivery.”
Online, Feldman Chevrolet of Novi is running a countdown clock, listing the days, hours, minutes and seconds left before the Sept. 30 deadline. “Secure your $7,500 EV Tax Credit Before the Battery Runs Out on This Offer!”
Those who pull up to the showroom on Grand River Avenue in Novi, though, don’t see a single sign plastered on the windows to fuel last-minute EV sales.
Tim Brown, EV specialist and sales consultant at Feldman Chevrolet of Novi, said customers don’t need a poster to remind them that what’s essentially a $7,500 government subsidy will end soon.
“I promise you, they know it,” Brown said, adding that plenty of news outlets have been talking about the end of the tax break.
Through the end of September, many EV buyers are able to get $7,500 off the sticker price — on top of any incentives on the vehicle — on the spot if they qualify. For some, it means they’d need less money for a down payment.
Beginning in 2024, qualified buyers could opt to transfer the clean vehicle credit directly to a registered car dealer instead of waiting to claim the credit on a federal income tax return the next year.
“Everybody wants a lower price,” said Brown, who has worked at the dealership for eight years.
Some buyers, he said, even have turned to EVs when they’re dealing with negative equity on an old car loan — or owe more on the car loan than what the car they’re trying to trade in is worth.
The $7,500 tax credit, plus any other rebates available, he said, has helped those who are upside down on their car loans work the numbers in their favor enough to get a new car.
Many people who bought cars during the pandemic, for example, paid shockingly high, premium prices for those vehicles and could still owe a good deal of money on their loans even after trading in the car.
“The EV has been a godsend to many people in that position,” Brown said. “It was the difference between them being stuck in a car or having a car that they could actually (buy) and get out of that situation and being in a better spot.”
Even older adults who might be less willing to adjust to a new technology, Brown said, reconsidered EVs once they understood how the $7,500 federal tax credit might work in their favor.
“Money will make people figure out how to charge things,” Brown said.
Katarski agreed. He estimated that EV sales could be up 8% or 10% in August at Feldman Chevrolet, Chevy’s No. 1 largest-selling EV dealer nationwide in 2024 and year to date.
According to Katarski, some who previously vowed that they would never drive an EV have found themselves saying: “You know what I’ll give it a go for a $247 a month lease payment.”
Cox Automotive noted in an Aug. 27 report that the EV market saw significant growth in July; and sales incentives on EVs were at record highs in July.
July new EV sales climbed to an estimated 130,082 units, up 26.4% month over month and 19.7% year over year, according to Cox Automotive, with 11 brands posting their best EV sales of the year in July.
“July recorded the second-highest EV sales in history, and August is expected to also see large gains,” according to Charlie Chesbrough, senior economist at Cox Automotive.
Nothing, of course, is truly simple when it comes to car shopping, EVs, and tax credits. Those tempted by all the last-minute EV buzz should take a hard look under the hood as the Sept. 30 deadline approaches.
The federal EV tax credit was set to expire at the end of 2032, but the mega-tax bill signed into law in July pushed that expiration deadline up to Sept. 30. President Donald Trump had campaigned against the EV tax credit and other rules trying to promote EV affordability and acceptance.
Taxpayers who buy qualifying EVs or plug-in hybrid models before Sept. 30 could be able to claim the tax credit on their 2025 federal income tax returns when they file next year.
But there’s another option, which many buyers use now. Buyers are allowed to transfer the credit to the dealer at the time of the sale. In that case, you will not get extra tax savings from the clean vehicle credit when filing a 2025 return.
Either way, you’re going to need paperwork to prove that you qualify for the credit. Save copies of the signed contract, payment receipt, and dealer’s point-of-sale paperwork.
If the buyer takes the credit upfront at the time of purchase but ultimately doesn’t qualify for the credit, the buyer owes the IRS. The buyer must repay the full value of the tax credit to the IRS when filing a tax return.
Why would someone not qualify? Maybe, you made too much money.
One rule of the game: You can only qualify for the clean vehicle credit when buying an EV if your modified adjusted gross income does not exceed $300,000 for married couples filing jointly; $225,000 for heads of households, and $150,000 for all other filers.
When it comes to income limits, you can use your modified AGI from the year you take delivery of the vehicle or the year before, whichever is less, according to the IRS.
The credit is nonrefundable when you file your taxes, so you can’t get back more on the credit than you owe in taxes for 2025 if you do not transfer the credit to the dealer at purchase time. You can’t apply any excess credit to future tax years.
Alison Flores, manager with The Tax Institute at H&R Block, noted that it’s important to ask your dealer for a “Time of Sale” report, which documents the purchase date and other required details for claiming the EV tax credit.
EV buyers, Flores said, must work with a car dealer who is registered, or will register, for the clean vehicle credit program through the energy credits online portal by Sept. 30.
The auto dealer completes a Form 15400 “Clean Vehicle Seller Report,” which includes the VIN number for the electric car or truck that you bought, the Social Security number of the buyer, and other information. That form is essential at tax time whether you will claim the credit on your return, or your dealer provided the tax credit on the spot, such as through down payment assistance.
The IRS automated its systems so that it could give real time verification based on the vehicle identification number.
In August, IRS brought up the possibility of taking delivery after Sept. 30 in an FAQ. But an FAQ doesn’t mean every issue has been settled. An FAQ can be modified down the road.
“Because these FAQs have not been published in the Internal Revenue Bulletin, they will not be relied on or used by the IRS to resolve a case,” the IRS states.
“Nonetheless,” the IRS notes, “a taxpayer who reasonably and in good faith relies on these FAQs will not be subject to a penalty that provides a reasonable cause standard for relief, including a negligence penalty or other accuracy-related penalty, to the extent that reliance results in an underpayment of tax.”
Even so, experts say now potential EV buyers who follow other requirements likely could take delivery later than Sept. 30 — such as when a local dealer does a swap with an out-of-town dealer to get you the exact EV that you’d like to buy — and still qualify for the credit.
“Once you take possession of the qualifying EV, you can take the credit,” said Flores, at H&R Block. “Possession of the vehicle is still necessary to claim the credit.”
The credits can be up to $7,500 for eligible new EVs and up to $4,000 for eligible used electric vehicles.
For vehicles placed in service April 18, 2023, and after, you’d receive up to $3,750 if the vehicle meets the critical minerals requirement only. An eligible clean vehicle can’t contain any critical minerals that were sourced by a “foreign entity of concern,” such as China.
Or you’d receive up to $3,750 if the vehicle meets the battery components requirement only. Or you’d receive up to $7,500 if the new qualifying EV meets both.
In some cases, EV buyers could get two tax breaks.
Some buyers might be able to claim the clean vehicle tax credit and a deduction on car loan interest when they file their 2025 income tax returns in 2026. Review all the rules. The income limits vary for the different tax breaks, for example, so not everyone will qualify.
The One Big Beautiful Bill Act, signed into law by Trump on July 4, introduces a deduction of up to $10,000 a year for car loan interest on loans originated after Dec. 31, 2024.
The new car or truck that you bought with the auto loan must have had its final assembly in the United States. The purchase of a new car — used cars don’t qualify — must take place in 2025 or after.
The income limit for the deduction for car loan interest is much lower than the limit for the clean vehicle credit.
The deduction for car loan interest, on the other hand, starts phasing out at a much lower income level. It phases out by $200 for every $1,000 of modified adjusted gross income above $100,000 for single filers and $200,000 for joint filers.
The new car loan deduction only applies in 2025, 2026, 2027 and 2028.
Both itemizers and nonitemizers can claim the car loan interest deduction. The same’s true with the clean vehicle tax credit.
More: Want to buy an electric car or truck? What to know before tax credits expire Sept. 30
More: Surprising inhibitor of EV adoption, according to new report: Junky garages
When you’re buying an EV, the make and model and the MSRP matter. Make sure the vehicle meets the price caps to qualify for the credit. The manufacturer’s suggested retail price, or MSRP, according to the IRS, may not exceed $80,000 for vans, SUVs, and pickup trucks, and $55,000 for other vehicles.
The credits do not apply to every package offered on some electric car or truck or plug-in hybrid models.
Check out the details at FuelEconomy.gov to search for eligible vehicles. Independent websites, such as Edmunds, also list eligible vehicles.
More: Trump’s new tax deduction on auto loans has major limitations: What car buyers should know
A loophole in the tax credit, which was part of the Inflation Reduction Act of 2022, gave dealers a unique ability to promote highly attractive leases for new EVs and plug-in hybrids. You’d need to lease before Sept. 30 to benefit.
Stephanie Valdez Streaty, director of industry insights at Cox Automotive, told the Detroit Free Press that only about 20 electric and plug-in hybrid models are eligible for the clean vehicle credit of up to $7,500 for consumers.
Thanks to the EV leasing loophole, though, she said, virtually any EV can qualify for what’s known as a commercial clean vehicle tax credit. And the driver’s income isn’t taken into account with leasing.
“If you don’t meet income or sourcing requirements, leasing can still unlock the full credit,” Valdez Streaty said.
If you lease, you cannot claim the tax credit when you file your 2025 federal income tax return for added savings.
Jessica Caldwell, head of insights for Edmunds, said automakers are promoting leases now to move EV inventory by the Sept. 30 deadline and win over first-time EV drivers who could keep coming back as EV adoption grows.
According to Edmunds data, leases made up 70% of EV transactions in July, compared with 10% for the same month three years ago before the loophole went into place.
The savings involved with leasing potentially could amount to about $208 a month, according to Edmunds.com, if you spread a $7,500 tax credit across a 36-month lease.
Lease deals can be highly regional and vary. Some lease deals will require a bigger down payment so that you can have lower monthly payments.
I spotted a 24-month lease deal in metro Detroit at $249 a month for a 2025 Chevrolet Equinox EV with $3,049 due at signing, according to Edmunds.com data. That deal ran through Sept. 2 in several states, as of late August.
Capital Hyundai of San Jose, California, had some 36-month, low-mileage lease deals at $99 to $199 a month on clean vehicles in late August with $4,998 in cash due at signing.
Valdez Streaty suggests that last-minute shoppers compare offers across dealer websites and EV marketplaces. Check for state or local EV incentives and utility rebates. Look for manufacturer promotions that can stack on top of the clean vehicle credit.
Be flexible in September. “Inventory is tightening, so consider multiple models or trims,” Valdez Streaty said.
Contact personal finance columnist Susan Tompor: stompor@freepress.com. Follow her on X @tompor.

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