Should You Still Buy A Used EV When The Tax Credit Ends?

The Used Clean Vehicle Credit is set to expire on Sep. 30, 2025. If you’ve been considering buying a used electric vehicle (EV), you need to act fast if you want to take advantage of the $4,000 credit. Before it ends, consider these key factors when deciding between a used EV or a traditional internal combustion engine (ICE) vehicle.

What is the EV tax credit — and why is it ending?

Beginning Jan. 1, 2023, the Used Clean Vehicle Credit offers consumers a tax credit of up to 30 percent of the sale price — up to $4,000 — of a qualified pre-owned electric vehicle (EV) or fuel-cell vehicle. Originally, the tax credit was scheduled to last through the end of 2032, but the Trump administration’s One Big Beautiful Bill is ending the credit on Sep. 30, 2025.

The main barriers to adoption of electric vehicles aren’t the evaporation of some of these subsidies. They’re the fundamental difficulties consumers are having with the cost, the convenience, and the reliability of electric vehicles.

— Patrick Anderson
Principal and CEO of Anderson Economic Group

The credit was designed to make EVs more accessible by lowering the total cost, especially for lower- and middle-class consumers. However, the tax credit has been criticized by Republicans as wasteful spending and market manipulation. The tax credit, along with government subsidies to auto manufacturers, has encouraged more investment in electric vehicles, but it hasn’t led to the mass EV adoption that was hoped for. In fact, a study by the National Bureau of Economic Research found that 75 percent of EV tax credits went to consumers who would have purchased an EV regardless of the credit.

If you plan on buying a used EV, your window for using the tax credit is quickly closing. While an auto loan tax deduction was included as part of the same tax bill that struck EV credits, this deduction only applies to new vehicles — so it won’t make a difference in the used EV market.

What to consider when buying a used EV

Green auto loans generally offer lower rates and longer terms than conventional auto loans, making them some of the best auto loan rates available. Long terms lead to smaller monthly payments, but they also mean more total interest charges over the life of your loan.

While a tax credit or other incentive can help when borrowing an auto loan, it’s important to consider how a vehicle will fit into your budget and whether it will meet your needs. If it doesn’t, a relatively small tax incentive wouldn’t have made a used electric vehicle a good purchase, even if the tax incentive had stuck around until 2032.

Purchase price

The upfront cost of an electric vehicle can be higher than that of a traditional internal-combustion engine (ICE) vehicle, even when used. Kelley Blue Book data from July shows that the average paid price for a new electric car was around $56,910, while gas-powered equivalents averaged $48,907.

However, used EVs tend to be much more affordable. Brian Moody, an editor at Cox Automotive, cites Kelley Blue Book data that shows the average used EV listing price in June was just over $36,000. The average used vehicle listing price was $25,512, according to data from Cox Automotive.

Opting for a model that holds its value better than average can help you avoid a major downside of new EVs: rapid depreciation. Luxury and performance models hold their value longer than budget models, but there are exceptions.

“Anyone looking for a great deal should look at a used electric car since [EVs] depreciate rapidly,” Moody advises. Their fast depreciation means you could get a relatively new EV at a much lower price than you would on an equivalent gas-powered vehicle.

Moody also points out that most electric vehicles have warranties of eight years or 100,000 miles, which are often passed from one owner to the next. “[That means] the second or third owner of an electric car likely may not have to worry about any catastrophic failures while the warranty is still in place.”

Charging cost

One of the big selling points of EVs has been that it’s cheaper to charge an EV than fuel a traditional vehicle. In places with good EV infrastructure, you may be able to receive a certain amount of free charging from public stations, use a subscription plan or charge at home overnight at a discounted rate. Nick Kurczewski, a writer for Kelley Blue Book, recently showed how much it costs to charge an EV. By employing these tactics, EV drivers can charge for less than it costs to fuel ICE vehicles.

But according to Patrick Anderson, Principal and CEO of Anderson Economic Group, that isn’t the case for every driver. His consulting firm specializes in economic analysis, business valuation and public policy research — and it has been studying electric vehicles annually since 2021. Their results show that the time commitment and cost of charging EVs have been significant challenges for many drivers.

The limited range of electric vehicles compared to ICE vehicles and the need to plan ahead for charging in places with limited access can make EVs less attractive, even with subsidies. In some cases, electric vehicles actually end up costing more to fuel than competing internal combustion engine vehicles.

“Taking away people’s time and making it risky for them to travel… those are very compelling reasons for people to avoid buying electric cars,” says Anderson.

Because the cost of charging versus fueling a vehicle can vary widely across the country, it’s important to consult tools for calculating the cost of owning an electric vehicle to ensure fueling costs fit comfortably within your budget.

Location, climate and infrastructure

Where you live influences the cost and convenience of driving an electric vehicle. In addition to the federal tax credit, there may be state and local incentives, utility incentives and toll incentives available for EVs.

The west coast of the U.S. has seen greater adoption than most other areas of the country, while Southern and rural areas have seen significantly less. If you live in an area with higher adoption rates, it’s likely that you’ll have cheaper and easier access to maintenance, repairs and charging stations.

For most of the United States of America, which is suburban and rural, and much of it where there’s cold weather, and nearly all of it where the charging infrastructure is inadequate, most people don’t find electric vehicles to be convenient and reliable for their everyday use.

— Patrick Anderson
Principal and CEO of Anderson Economic Group

To illustrate his point, Anderson explains that California drivers have some of the highest electric and gas prices in the country, but this is partially offset by having a better charging infrastructure than most states, according to research by the Anderson Economic Group.

“That works out to relatively affordable EV operating costs in that state, at least for drivers that can rely on home charging most of the time.”

The climate where you live will also impact your total costs. Your EV’s range can be reduced by about 15 percent at 95 degrees Fahrenheit and by up to 41 percent starting at around 20 degrees Fahrenheit. If you live in an area with more extreme temperatures, you may not see the expected range or cost savings for your EV, particularly as your battery ages.

Even if you live in a state with good EV infrastructure, you should also consider your insurance costs. On average, auto insurance for EVs can cost up to $2,800 more per year than for ICE vehicles. This may feel counterintuitive given that EVs have fewer moving parts and a reputation for requiring fewer repairs. Unfortunately, the maintenance they do need can be much more costly because of the price of EV parts, the amount of technology in them and the specialized technicians needed to work on them.

Maximizing the EV tax credit while there’s still time

Check minimum requirements

With the tax credit ending soon, you need to be sure you and your vehicle qualify. The IRS Used Clean Vehicle Credit page outlines who is eligible to claim the tax credit. Aside from being the non-original owner, you must have an adjusted gross income (AGI) under certain thresholds, depending on your filing status.

Among other requirements, the vehicle itself must:

• Have a sale price of $25,000 or less.
• Be at least 2 model years old.
• Have a gross vehicle weight rating of less than 14,000 pounds.
• Have a battery capacity of at least 7 kilowatt-hours.

Vehicles must be purchased through a dealership, and you must buy an eligible EV model.

Hunt for deals

Many manufacturers are offering special incentives throughout the summer to offset expected price increases due to tariffs. 2026 models will also start rolling out in late summer and early fall, meaning 2025 models will start being discounted.

Moody advises drivers not to wait for a better deal than what’s available now. While it’s possible to get a better deal later in the year as more drivers trade in for newer models, it’s not guaranteed. He explains that late-year sales will be on the least popular, least desirable versions.

Availability is also a factor. For example, while the Rivian R1T has seen high demand thanks to its unique features, supplies have been low due to a limited dealer network in the U.S. As a result, the units that are available are holding their value but may be hard to find within the $25,000 price cap set by the tax credit.

If you’re searching for a second car or something for short commutes, you can also save by choosing a more basic model. “Electric cars with a driving range on the low side, say less than 300 miles, will probably be the best deals,” Moody says. Of course, this won’t meet every driver’s needs — but if it meets yours, you could save hundreds of dollars on your new vehicle.

Consider a new EV to qualify for additional tax breaks

From now until September 30, car buyers are in a unique position to qualify for both the standard EV tax credit and the new auto loan interest tax deduction. This could mean even bigger savings at tax time, but it also requires that you buy a new, eligible vehicle to claim the deduction.

Depending on your financial situation and what you want from your vehicle, choosing new over used could be a good fit, but it’s important to weigh the pros and cons of new versus used vehicles. If the vehicle you really want doesn’t qualify, the deduction should not sway your purchase decision in most cases.

Bottom line

If you’ve been planning to buy a used electric vehicle, now is the time to do so before the used EV tax credit ends. But if you’re not already interested in an EV, there are other deals available that may be a better fit for your lifestyle. Tax deductions are beneficial, but when it comes to your vehicle, the most important factor is that it fits your budget and driving needs now — and for years to come.