Written by Peyton Lege, Accountant
The One Big Beautiful Bill Act (OBBBA) introduced many federal tax changes that are going to be very beneficial to the American taxpayers. These modifications will affect both individual taxpayers and businesses, and hopefully for the better. One of the main provisions that stuck out in this new act was the expiring clean vehicle credits. This article explains the upcoming expiration of key clean-vehicle credits and helps the client get a better understanding of how to prepare before the deadline.
Sections 70501, 70502, and 70503 of the OBBBA modify three major clean-vehicle tax incentives for the taxpayers. Those three major credits are the New Clean Vehicle Credit (30D), the Used Clean Vehicle Credit (25E), and the Qualified commercial Clean Vehicle Credit (45W). The OBBBA states that these credits will no longer be available for any vehicle acquired after September 30, 2025. (Source: https://www.irs.gov/newsroom/one-big-beautiful-bill-provisions) These provisions eliminate federal tax incentives for the purchase or lease of clean vehicles. Some examples of clean vehicles include electric, hydrogen, and plug-in hybrid vehicle models after September 30, 2025. This provision impacts many taxpayers: individuals, transportation companies, commercial fleet operators, and many dealerships that have clean vehicles in their inventories.
The most significant implication is the acquisition deadline. The three credits state that to claim the credit, the taxpayer must complete the acquisition on or before September 30, 2025. This is typically done through a written binding contract and once payment has been made. “Sections 25E(a), 30D(a), and 45W(a) require the vehicle to be “placed in service” to claim the respective credit.” Source: IRS FAQs on Sec IRS FAQs on Sections 25C, 25D, 25E, 30C, 30D, 45L, 45W, and 179D under OBBBA/ No.3). A vehicle acquired even just one day after the deadline will not qualify for the credits, regardless of order date or expected delivery timeline. For individuals, this may affect vehicle purchase timing and budgeting. An example would be if a client is waiting for their end of the year bonus to buy an electric vehicle in December 2025 would no longer qualify for this credit. For businesses, like commercial fleet operators, the expiration of Section 45W Commercial Clean Vehicle Credit might have major financial implications. Many companies rely on this credit to help them reduce the cost of switching to electric or zero-emission vehicle fleets. Productions delays, shipping and supply-chain issues could place planned acquisitions at risk if the contracts are not executed before the deadline.
Taxpayers planning to purchase a qualifying vehicle, new, used, or commercial, should start reviewing their options immediately. Make sure to confirm acquisition timelines, verify eligibility rules, and work with the dealerships to ensure that the required contract language is finalized before September 30, 2025. Businesses with clean-vehicle goals should also coordinate financing and delivery schedules to avoid missing out on significant tax benefits and savings for their customers. For personal guidance on how the expiring credits are applicable to your situation, contact our team to review opportunities and draft strategies on how to best optimize your tax benefits.
Key clean-vehicle incentives are ending soon, making it essential to plan ahead and continue to stay informed. Thank you for trusting our firm to provide you with the best services, and we appreciate the opportunity to support your decisions. We invite you to reach out with any questions you might have, whether that be on the clean-vehicle provisions, tax questions, or any other questions you might have. We will be happy to assist you with the best of our ability and knowledge.