Electric Vehicle and Homeowner Tax Credits Ending After 2025
The U.S. House of Representatives recently passed a sweeping tax and spending measure, dubbed “The One, Big, Beautiful Bill.” It includes significant tax implications for electric vehicle (EV) buyers and homeowners. Specifically, the bill eliminates federal tax credits after December 31, 2025, for clean vehicles and certain energy-efficient home improvements.
If you’ve been considering purchasing an EV or upgrading your home’s energy efficiency, you may want to act soon to take advantage of the current incentives before they potentially disappear. Here are the details of what could change under the proposed legislation, now being considered by the Senate.
Clean Vehicle Tax Credits
The House bill would eliminate the following new and used clean vehicle tax credits after 2025, with a limited exception:
Credits for new clean vehicles (Section 30D). Under the Inflation Reduction Act, buyers of new qualifying clean vehicles can receive up to $7,500 in nonrefundable tax credits, based on specific mineral sourcing and battery component requirements. Vehicles that meet only one of these criteria still qualify for a $3,750 credit. Clean vehicles include EVs, hydrogen fuel cell cars and plug-in hybrids. Under current law, this credit is available through 2032.
Additional eligibility rules include:
- The vehicle must be for personal use (not resale),
- It must be used primarily in the United States, and
- Final assembly of the vehicle must occur in North America.
The manufacturer suggested retail price (MSRP) can’t exceed $80,000 for vans, sport utility vehicles and pickup trucks, or $55,000 for other vehicles. The MSRP for this purpose isn’t necessarily the price you pay. It includes manufacturer-installed options, accessories and trim but excludes destination fees.
In addition, a taxpayer must meet modified adjusted gross income (MAGI) caps of $300,000 for joint filers, $225,000 for heads of households and $150,000 for all other filers.
Credits for used clean vehicles (Section 25E). Buyers of used clean vehicles may qualify for a credit of 30% of the sale price, up to $4,000. To be eligible for the credit:
- The sale price must be under $25,000, and
- The vehicle must be at least two model years old and meet battery requirements.
There’s also an income limit for used clean vehicles, but it’s lower than the limits for new vehicles. For used vehicles, the MAGI cap is $150,000 for married joint filers, $112,500 for heads of households and $75,000 for others.
Both credits are nonrefundable and can’t be carried forward unless claimed as a general business credit. Taxpayers can transfer the credit to a dealer to reduce the purchase price or claim it when filing their tax returns. Only two dealer transfer elections are allowed per year. IRS Form 8936 is required when either claiming the EV credit or transferring it to a dealer.
Important: The House bill provides an exception for small-volume manufacturers, allowing vehicles from manufacturers that have sold fewer than 200,000 qualifying clean vehicles to retain eligibility for the current credits through 2026.
The Energy Efficient Home Improvement Credit
In addition, the House bill would eliminate energy-efficient home improvement credits for upgrades such as qualified windows and exterior doors after 2025. If these provisions are enacted, 2025 may be your final chance to offset some of the cost of high-efficiency home improvements through tax savings.
Under current law, homeowners can claim the Section 25C Energy Efficient Home Improvement Credit for up to 30% of the cost of eligible improvements each year through 2032. The annual limits are:
- Up to $600 for exterior windows and skylights, and
- Up to $500 total for exterior doors (limited to $250 per door).
These upgrades must meet Energy Star certification requirements.
Key Takeaways
With these credits potentially on the chopping block, it may be a good time to purchase an EV or make energy-efficient home upgrades — especially if you were already planning to make these investments. Be sure to retain purchase receipts and certifications for eligible upgrades.
Potential legislative changes add to the complexity of navigating tax credits. Although the House bill retains these green tax credits through year end, the Senate could make changes in its bill (which would then have to pass in the House before being signed into law). Contact your tax advisor to help you understand the eligibility requirements for these credits and claim them while they’re still available. Also visit the IRS website for more information about clean vehicle tax credits and the Energy Efficient Home Improvement Credit.
Copyright 2025
This article appeared in Walz Group’s June 2, 2025 issue of The Bottom Line e-newsletter, produced by TopLine Content Marketing. This content is for informational purposes only.
