Senate Republicans are pushing to expedite plans to end the federal EV tax credit and immediately kill the EV incentives for vehicles made outside North America.
The details: The Senate proposal—anchored in a tax and budget bill—would further rollback several measures put in place by the Biden Administration, making the road to electrification a lot bumpier.
The bill would end the $7,500 tax credit on new EV sales 180 days after the measure is signed into law and nix the $4,000 used-vehicle EV tax credit 90 days after the bill's approval, reports Reuters.
It would immediately end the $7,500 credit for leased EVs—with vehicles built in North America being eligible for the tax credit for 180 more days after the measure passes.
The Republican-led Senate bill also includes exemptions for interest paid on car loans from taxes for new cars made in the U.S. through to 2028— but phases it out for taxpayers making more than $100,000 annually.
Why it matters: The Senate bill is far more aggressive than measures proposed by House Republicans, which would allow the $7,500 new EV tax credit to continue through to the end of 2025, and through to the end of 2026 for carmakers that have not yet sold 200,000 EVs.
Between the lines: The proposed Senate Republican bill follows a series of aggressive political moves poised to completely disrupt the EV market—as political leaders with opposing views on climate change rev up to battle it out in court.
Last week, President Trump signed a resolution—approved by Congress—that prevents California from banning the sale of gas-powered vehicles by 2035, potentially voiding the plan in 11 other states that have adopted it.
California responded immediately to Trump’s resolution—filing a lawsuit claiming that the grounds in which the measure passed Congress was unlawful, also vowing to find another way to implement the plan.
Bottom line: If passed, the Senate Republican bill would rapidly eliminate key EV tax credits—cutting the $7,500 and $4,000 incentives within months and immediately ending benefits for leased and foreign-made EVs. This could disrupt demand, hurt EV affordability, and create major uncertainty for automakers and dealers planning around electrification.
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Sources: 1. Similarweb, Traffic Report (Cars.com, Autotrader, TrueCar, CARFAX Listings (defined as CARFAX Total visits minus Vehicle History Reports traffic), Q1'25, USA. 2. CarGurus analysis of US dealers that changed a vehicle price based on NBDR recommendations compared to vehicles without an NBDR- informed price change from Nov 2023 through Dec 2024.
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