Electric cars incentives at risk! The recent approval in the U.S. Senate of the One Big Beautiful Bill, brought by the U.S. President Donald Trump, is key for the country’s environmental and fiscal policy.
With the decisive vote of Vice President JD Vance, this new legislation proposes the elimination of tax credits for electric vehicles established under the Inflation Reduction Act. Due to this situation, many sectors that promote sustainable mobility are concerned.
Researchers at MIT and the University of Michigan have highlighted the importance of these subsidies in reducing emissions from the transportation sector, the largest emitter of greenhouse gases in the U.S., according to the Environmental Protection Agency (EPA). In addition, data from Kelley Blue Book show that, although EV prices have been falling, tax incentives remain key to making them more accessible to the public. So, let’s learn more about this new legislation.
One Big Beautiful Bill
A new bill promoted by Donald Trump and passed by the U.S. Senate would eliminate federal tax credits for electric vehicles (EVs). If the legislation also passes in the House of Representatives, the incentives that make it more affordable to buy EVs would disappear on September 30, 2025.
This change is part of a large tax and public spending bill, and will affect both buyers and the future of electric mobility in the country.
Subsidies disappearing
Currently, electric car buyers in the U.S. receive two types of tax credits, but they could stop enjoying this aid very soon. Let’s see what are there types of subsidies:
- $7,500 when purchasing or leasing a new electric vehicle.
- $4,000 when purchasing a used electric vehicle.
These subsidies were created to make EVs more attractive to consumers. I mean, people are used to gasoline or diesel cars, so if electric ones are more expensive there’s no point for lower and mid-sized classes to buy them. That’s why these subsidies are important to introduce green cars to as many citizens as possible. Unfortunately, these two benefits won’t exist after September 30, 2025.
Importance of these credits
As we mentioned before, EVs tend to be more expensive than gasoline cars, but let’s see this situation with a clear example and numbers: In May 2025, a new EV cost on average $57,700, while a gasoline car cost $48,100. On the other hand, used cars showed a smaller difference: $36,000 for a used EV versus $34,000 for a gasoline one.
Researchers at the University of Michigan stated in 2024 that these credits are crucial to accelerating the point at which an EV becomes more cost-effective than an internal combustion car.
EVs and their positive contribution to the world
One of the reasons these subsidies were created was to reduce pollution from the transportation sector, which is the largest emitter of greenhouse gases in the U.S. (28% of the total, according to the Environmental Protection Agency).
Electric cars do not emit tailpipe gases, as they do not burn gasoline. Although pollution is generated in the manufacturing and charging of the vehicle, studies by the Massachusetts Institute of Technology (MIT) conclude that EVs are still “clearly better for the climate” even considering these indirect emissions.
More EVS are expected to be bought this summer
According to expert Ingrid Malmgren, of the Plug In America organization, this will be “the summer of the electric car,” because many people will try to buy one before the benefit ends.
In addition, Malmgren advises that, if someone is going to buy an EV in the next few months, they should take advantage of the tax credit at the time of purchase (at the dealership), rather than waiting to claim it when filing their tax return the following year.
As you can see, we never know what’s going to happen with new things coming to us. EVs were the talk of the town and so promising, but now the government of the United States has decided to cut every economic help that allows the increase of purchases. So, we’ll have to wait until this new regulation is finished. What do you think about the EVs subsidies cut?
