IRS Extends $7,500 EV Tax Credit Deadline for Buyers with Binding Orders

The federal $7,500 tax credit for electric vehicle (EV) buyers, set to expire on September 30, 2025, has seen a significant update from the IRS, granting buyers more flexibility to secure the credit. Previously, buyers had to take delivery of their EVs by the deadline, but new IRS guidance allows taxpayers who have a written binding contract and payment in place by September 30 to claim the credit even if they take possession after that date. This adjustment benefits automakers like Tesla, as it enables high-demand deliveries to extend into the fourth quarter while still qualifying for the tax credit. The change aims to address the surge in EV demand before the deadline, which has strained dealer and manufacturer inventories, and prevents a hard cutoff that could disrupt sales. However, the overall expiration of the credit may impact EV affordability and sales long-term, with only certain vehicles meeting strict eligibility criteria, including production and pricing limits. Some states, such as California, are considering local incentives to compensate for the loss of the federal subsidy after its expiration.