Clean Vehicle Credit – Final Phase-Out Under One Beautiful Bill
The One Beautiful Bill Act, signed into law on July 4, 2025, significantly shortens the timeline for claiming federal tax credits on clean vehicles. Originally extended through 2032 under the Inflation Reduction Act, these credits now expire for vehicles placed in service after September 30, 2025.
Key Changes Under the New Law
- The 200,000-vehicle manufacturer cap has been permanently eliminated
- Final assembly must occur in North America
- Credits are nonrefundable and cannot be carried forward
- Transfer credit option at point of sale remains available through September 30, 2025
New Clean Vehicle Credit (IRC §30D)
Maximum Credit: Up to $7,500
- $3,750 if the vehicle meets critical minerals sourcing requirements
- $3,750 if the vehicle meets battery components sourcing requirements
Income Limits
Taxpayers are not eligible if modified AGI exceeds:
- $300,000 – Married Filing Jointly
- $225,000 – Head of Household
- $150,000 – Single or Married Filing Separately
Vehicle Price Limits
Credit is disallowed if MSRP exceeds:
- $80,000 – Vans, SUVs, Pickup Trucks
- $55,000 – All other vehicles
Dealership Reporting Requirements
Dealers must report the following to the IRS and buyer:
- Seller and buyer names & taxpayer IDs
- Vehicle Identification Number (VIN)
- Battery capacity
- Confirmation of original use
- Sale date and price
- Maximum allowable credit
- Transfer credit applied (if applicable)
- Signed declaration under penalty of perjury
Previously-Owned Clean Vehicle Credit (IRC §25E)
Maximum Credit: Lesser of $4,000 or 30% of sale price
- Applies to used clean vehicles purchased from licensed dealers
- Vehicle must be at least two model years older than the year of purchase
- Must be the first resale since August 16, 2022
Income Limits
Taxpayers are not eligible if modified AGI exceeds:
- $150,000 – Married Filing Jointly
- $112,500 – Head of Household
- $75,000 – Single or Married Filing Separately
Deadline Reminder
To qualify for either credit:
- Vehicle must be placed in service by September 30, 2025
- Form 8936 must be filed with your tax return
- Visit Fuel Economy Tax Credit Lookup to verify vehicle eligibility