IRS Modifies EV Tax Credit Ruling Allowing More Customers to Qualify Ahead of 9/30 Deadline

“One Big Beautiful Bill” eliminated the federal tax credits for new and previously owned clean vehicles (IRC §30D and §25E) for purchases made after September 30, 2025. The credits provided up to $7,500 for new EVs and up to $4,000 for qualifying used EVs, with the requirement that the vehicle must have been delivered prior to September 30. Reservations or down payments did not satisfy the requirement.  Many consumers rushed to make a purchase to ensure they received the credit, and many more consumers would not have been able to qualify.

The IRS has just issued updated guidance to alter the definition of “acquired” to extend an opportunity to those who have entered a “legally binding contract to take delivery of the vehicle.” Unlike the previous definition, those who have made a nominal down payment or traded in a vehicle prior to the elimination of the credit on September 30, will now qualify for the incentive.

Claiming the credit

The modification by the IRS gives consumers more time and more opportunity to benefit from the sunsetting tax credit ahead of the deadline, but there are some important notes to keep in mind when claiming it.

• A nominal down payment that enters you into a binding contract secures your eligibility for the credit, but the credit should not be claimed until the vehicle is placed in service (when taking possession of the vehicle).

  • This applies for IRC §30D, §25E, and §45W

• To ensure the credit is secured, the dealer should provide a time-of-sale report when the buyer takes possession so they will qualify even if the vehicle is placed in service after September 30. 

Maintaining accurate documentation is critical to make sure you receive the full credit for which you are eligible. 

Recent adjustment is a win for consumers, electrified fleets, and EV Makers

This modification is extremely beneficial for those in the market for an EV, business owners who have ambitions of electrifying their fleet, and of course, EV manufacturers. Tesla, in particular, was seeing increased demand and facing delays with all of the consumers trying to purchase and obtain possession of vehicles before the deadline. Some even made concessions on trim level, color, interior, etc. to take what was available.

With the adjustment, Tesla and likely other popular EV models will see solid Q3 numbers, and the high demand could continue into Q4 now that the EV credit has been made more accessible.