\n<\/p>\n
Mike Kemp | In Pictures | Getty Images<\/p>\n<\/div>\n<\/div>\n<\/div>\n
A massive tax and spending package<\/a> championed by President Trump and passed by the Senate on Tuesday<\/a> would end tax credits for electric vehicles within three months.<\/p>\n The legislation<\/a>, which Republicans are trying to get to the president\u2019s desk by July 4, would axe tax breaks for consumers who buy or lease EVs after Sept. 30, 2025.<\/p>\n Lawmakers would eliminate a $7,500 tax credit for households that buy or lease a new EV, and a $4,000 credit for consumers who purchase a used EV.<\/p>\n \u201cIf you\u2019re interested in driving an EV \u2014 either new, used or leased \u2014 now is the time to act,\u201d said Ingrid Malmgren, senior policy director at Plug In America, a nonprofit advocating for a quicker transition to electric cars.<\/p>\n<\/div>\n \u201cThis is going to be the summer of the EV, because come the end of September those credits will be gone\u201d if the legislation passes and remains unchanged, Malmgren said.<\/p>\n The bill passed the Senate on the narrowest of margins \u2014 51-50, with a final, tie-breaking vote cast by Vice President JD Vance. It now heads to the House for approval.<\/p>\n The Senate\u2019s timeline to nix the EV tax credits is more stringent than an initial version of the legislation passed in May by House Republicans<\/a>, who would have ended the tax breaks after Dec. 31, 2025. The House One Big Beautiful Bill Act also exempted certain EVs from that deadline.<\/p>\n<\/div>\n The Inflation Reduction Act, a landmark climate law signed by former President Joe Biden, offered the tax breaks for EVs through 2032.<\/p>\n The federal tax incentives aimed to boost uptake of EVs \u2014 and reduce the nation\u2019s greenhouse gas emissions \u2014 by making them more affordable relative to traditional cars with an internal combustion engine.<\/p>\n The transportation sector accounts for about 28% of all U.S. greenhouse gas emissions, making it the largest contributor of U.S. emissions, according<\/a> to the Environmental Protection Agency.<\/p>\n More from Personal Finance:<\/strong> Fully electric cars don\u2019t emit planet-warming greenhouse gases from their tailpipes because they don\u2019t burn fossil fuels.<\/p>\n While some emissions may be created when electric cars are built and charged, EVs are \u201cunambiguously better for the climate\u201d than gasoline-powered cars even when factoring in those life-cycle emissions, according<\/a> to researchers at the Massachusetts Institute of Technology.<\/p>\n<\/div>\n New EVs have historically come with higher price tags than comparable traditional cars, experts said.<\/p>\n In May, the average new EV had a price tag around $57,700 before subsidies, while gas cars cost around $48,100, according to Kelley Blue Book data<\/a>. Used EVs had a price point around $36,000, slightly higher than the $34,000 for used internal-combustion-engine cars, it found.<\/p>\n The price gap is shrinking, experts said.<\/p>\n Federal tax incentives like the $7,500 federal tax credit \u201cplay a pivotal role in accelerating the break-even point between electric vehicles and gasoline vehicles,\u201d wrote<\/a> researchers at the University of Michigan in 2024.<\/p>\n<\/div>\nTax incentives make EVs more affordable<\/h2>\n
Trump bill mostly benefits the rich<\/a>
Spending bill boosts child tax credit<\/a>
Republican tax bill passes \u2018SALT\u2019 deduction cap of $40,000<\/a><\/p>\nThe EV premium is shrinking<\/h2>\n