As we approach the end of the summer holiday car shopping season, many buyers are looking to take advantage of the federal electric-vehicle tax credit before it expires at the end of September. If you’re one of those buyers, you may be wondering how to find the best deals on electrified cars. Here are some tips and strategies to help you navigate the car shopping process.
Tax Credits: Which Buyers And Vehicles Qualify?
The federal tax credit for new and used EVs is set to expire on September 30, thanks to President Trump’s One Big Beautiful Bill Act. This tax credit has been a significant incentive for buyers, providing savings of up to $7,500 on new EVs and $4,000 on certain used EVs. It’s important to note that not every vehicle qualifies for this tax credit, as there are specific rules regarding battery sourcing, production location, and total costs.
If you’re considering purchasing a new EV, it’s essential to check if the vehicle qualifies for the full $7,500 credit. The IRS also has income thresholds that limit who can receive the credit, so be sure to review those details and consult with a tax professional if needed. The tax credit is capped at $80,000 for vans, SUVs, and pickup trucks, and $55,000 for other vehicles.
For budget-conscious buyers looking for an inexpensive EV, there is a tax credit of up to $4,000 for vehicles that are at least two years old and have a transaction price of $25,000 and under. However, the income thresholds for these cars are slightly lower. It’s important to confirm with the dealership whether they will handle the necessary paperwork to obtain the credit.
Leases Are Where Most Of The Deals Are
Leasing has become a popular option for new EVs, as all EV leases currently qualify for the $7,500 tax credit. However, this leasing loophole is set to expire at the end of September. When comparing lease programs across different brands, it’s crucial to pay attention to the fine print and details. Many automakers advertise low lease payments, but these may require a significant upfront payment to make the math work.
When leasing a new EV, it’s advisable to put little or no money down to avoid risking that down payment in case the leased car is totaled in an accident. Before visiting the dealership, compare advertised lease specials, reconfigure the numbers, and calculate the effective monthly payment to compare it to the MSRP.
For example, comparing the Hyundai Ioniq 5 and the Kia EV6 can help you determine the better value between two similar cars. By analyzing the lease terms, MSRP, and total lease cost, you can make an informed decision on which vehicle offers the best deal.
A Purchase Could Be A Better Play For Hybrids and Plug-Ins
If you’re not ready to make the full jump to an EV, plug-in hybrids and standard hybrids can be a cost-effective alternative to reduce fuel costs. While leases are usually the preferred option for fully electrified models, the programs for plug-in hybrids and hybrids may not be as compelling. For example, buying a Honda Civic Hybrid could be a better financial decision than leasing it, given the potential savings over the long term.
Don’t Count Out Used Cars
There are fantastic deals to be found in the pre-owned market, from $15,000 cars to six-figure luxury vehicles. The tax credit applies to any EV under $25,000 that is at least two years old, provided you meet the income requirements. Shopping for a used car requires a different strategy than shopping for a new car, as dealers may not have much room to negotiate on price.
When comparing used car deals, focus on the best value rather than the biggest discount. Be cautious of additional charges like “reconditioning fees” and “mandatory accessories” that some dealers may add on top of the advertised price. It’s essential to get itemized quotes to compare the true value of different leads.
In conclusion, with the federal tax credit set to expire and potential price increases on the horizon, now is a great time to score a deal on your next vehicle, whether it’s a full battery EV or a fuel-efficient hybrid. By comparing prices, negotiating with dealers, and considering both new and used options, you can find the best deal on an electrified car that fits your budget and lifestyle.