The Trump Administration’s Plan to Eliminate the Federal EV Tax Credit
According to a report by Reuters, the incoming Trump administration is prioritizing the elimination of the $7,500 federal EV tax credit. This move has the support of Tesla.
The Trump transition team is considering scrapping the EV tax credit as part of broader tax legislation. This decision is seen as an easy target for approval from the Republican-controlled Congress. The administration is looking for cost savings to fund trillions of dollars in tax cuts set to expire early in Trump’s term.
2025 Nissan Leaf
Tesla representatives have expressed their support for ending the tax credit to the Trump-transition committee. Tesla, being the largest U.S. EV brand, is making a strategic move that might impact competitors less established in the EV market. This decision also aligns Elon Musk, Tesla’s CEO and a Trump supporter, with the President-elect.
Under the Biden administration, the EV tax credit underwent changes under the Inflation Reduction Act (IRA) of 2022. It was transformed into an instant dealership rebate in 2024, with added restrictions on qualifying vehicles related to battery components’ origin and critical minerals. Requirements for North American assembly, price, and income caps were also introduced.
2025 Lucid Air Pure
The EV purchase credit now depends on detailed paperwork and manufacturing nuances, leading to some U.S.-made models like the Nissan Leaf fluctuating in qualification status.
One contentious aspect of the tax credit is the “leasing loophole,” which applies a $7,500 credit towards leased EVs regardless of origin or sticker price. Democrats have refrained from addressing this loophole to avoid triggering a vote on all EV credits.