It's been a few weeks since we lost the EV tax credits on eligible electric cars like the Model Y, and we're starting to see just how much money we're not saving now. One of the quickest ways to see the effect is to take a look at leasing costs. While some brands are actually doing their best to match the deals they were offering while the incentives were still in play, the vast majority of once-eligible cars now cost a lot more to drive from month to month.
If you want to put a silver lining on it, you could argue that the credits already did what they were intended to do. That is, Americans bought around 1.3 million electric vehicles last year, representing 7.3% year-over-year market growth from 2023. Of course, the bottom line is simply that EVs are generally more expensive for the consumer now, so we can't blame anyone who doesn't feel like looking on the bright side of life this time. Here's what you need to know.
The EV Credits Officially Went Away At The End Of September
Tesla
EV credits date back further than you might think. President Obama first offered federal EV credits all the way back in October 2008, with the Extension Act. The latest iteration of the EV tax credit was enacted under President Biden by the bi-partisan 2022 Inflation Reduction Act.
This is the act that gave us a $7,500 credit depending on certain criteria like critical mineral sourcing and final assembly. In short: the more American your car, the more money you could claim. $3,750 of the credit was dependent on battery components alone, which is why some cars could score you a bigger incentive than others.
To run down the qualifiers, according to the IRS, eligible vehicles must:
| Have a battery capacity of at least 7 kWh |
| Be made by a qualifying manufacturer |
| Have a gross vehicle weight rating under 14,000 lbs |
| Have its final assembly conducted in North America |
| Meet critical mineral and battery component requirements |
| Be sold new |
| Be sold at an MSRP of $80,000 or less for vans, SUVs, and pickups, or $55,000 or less for all other vehicles |
Of course, this is all a history lesson at this point, because the credits were wiped completely off the table on October 1, 2025, by President Trump's One Big Beautiful Bill.
State Level Incentives Are Still Available
Tesla
Most US states offer some sort of incentives for driving an EV, although these are being expired, rewritten, and renewed all the time, especially in the wake of the federal EV credits expiring. But, there are some good deals to be had out there. For example, according to DriveClean, Californians can claim a $1,350 credit just for retiring a gas-powered vehicle.
You shouldn't expect to make up the total $7,500 in tax credits through state-level incentives alone, but you're not totally on your own out there. Many state governments have crunched the numbers and determined that it's better for the economy and better for the state to have people buying electric vehicles, and they're happy to give drivers a little nudge in that direction.
How Is This Affecting Leases?
Tesla
The EV credit didn't technically apply to leasing. The idea was that you would buy the EV, and then claim the credit next April when you file your taxes. But, if you were leasing, the dealer could claim a $7,500 clean vehicle tax credit, even if the car didn't meet certain made-in-American qualifications. This allowed dealers to pass the credit on to drivers as an incentive, until these credits went away along with the ones we were able to claim as consumers for buying a new EV.
Read the full article on CarBuzz
This article originally appeared on CarBuzz and is republished here with permission.
