What California Drivers Need to Know Before Incentives Disappear
If you’ve been thinking about buying or leasing an electric vehicle (EV), now may be your last chance to benefit from the $7,500 federal tax credit. A newly revised tax and budget plan from Senate Republicans will eliminate this key incentive — along with the $4,000 credit for used EVs — as early as September 30, 2025.
This shift will have significant financial implications for California drivers, especially those planning to switch to electric to comply with emissions regulations or reduce long-term vehicle costs.
What's in the New Bill?
Released on June 28, 2025, the Republican-led Senate bill proposes:
- Ending the $7,500 tax credit for new EV sales and leases on September 30
- Ending the $4,000 credit for used EVs
- Rolling back Biden-era EV policies aimed at lowering emissions and promoting clean energy
- Eliminating fines for automakers who fail to meet Corporate Average Fuel Economy (CAFE) standards
- Exempting interest on auto loans from federal taxes for U.S.-made new gas vehicles (through 2028), phasing out above $100K income
- Dropping a proposal that will have forced the U.S. Postal Service (USPS) to remove 7,200 EVs, including Ford e-Transit vans and Next Generation Delivery Vehicles from Oshkosh Defense
Source: Reuters – Senate Republicans seek to end EV tax credit by September 30
Why the Sudden Change?
The proposal reflects a broader policy reversal: shifting away from electric incentives and climate goals in favor of traditional gas-powered vehicle production.
Key differences in House vs. Senate proposals:
- The House version will extend the $7,500 new EV credit through the end of 2025, and allow certain automakers (who haven’t reached 200,000 EV sales) to keep credits until end of 2026
- The Senate version, however, imposes a hard stop on September 30, with no exemptions for automakers still scaling their EV programs
- It also seeks to override California’s plan to ban gas-only new car sales by 2035 — a policy adopted by 11 other states, representing one-third of the U.S. market
What It Means for California EV Buyers
California residents are already grappling with rising gas prices, evolving emissions regulations, and mounting pressure to make the switch to electric vehicles. If you're thinking about making the switch, this bill will shrink your federal incentive window dramatically.
Right now, the federal EV tax credit of up to $7,500 may still be available — but only until September 30, 2025, if the Senate bill passes.
While California previously offered additional support through the Clean Vehicle Rebate Project (CVRP), that program has ended. Still, some local air districts or utility companies may offer their own EV incentives, depending on your location.
If the federal credit ends, California buyers will lose one of the last major financial supports available — potentially increasing upfront costs by thousands of dollars.
What If Your New EV Has Issues?
Buying a car — electric or not — is a big investment. If your new EV ends up with recurring problems that the dealership can't fix, you may be entitled to a refund or replacement under California’s Lemon Law protections.
Some EV-specific issues we’ve seen include:
- Battery failure
- Software defects
- Charging system malfunctions
- Drive system warnings and electrical errors
If your EV has been in for multiple warranty-covered repairs, and the issue impacts its use, value, or safety, it may qualify as a lemon under California law.
Take Action Before September 30
The cutoff date for federal EV tax credits is September 30, 2025. If you’ve been thinking about switching to electric, this summer may be your best (and possibly last) chance to save.
- Research EV reliability and read consumer reviews
- Act quickly to purchase or lease before September 30
- Document all service visits, warranty repairs, and communication with dealers
- Know your Lemon Law rights before you sign
Questions? Get Legal Support for Faulty EVs
If you’ve purchased or leased an EV and are dealing with ongoing mechanical or electrical issues, you may be entitled to a refund, replacement, or cash compensation under California law.
We’ve helped countless consumers — including EV owners — get relief when dealerships and manufacturers don’t deliver.
Contact us for a free case review today before your legal and financial options close with the September deadline.