by Cassandra Hemenway, for The Montpelier Bridge
One result of President Trump’s “Big Beautiful Bill” passed by Republicans in July is that it ends a federal tax incentive for the purchase or lease of electric vehicles as of Sept. 30, 2025. So if you’ve been thinking about an EV, now’s the time to act.
Under the Biden-era Inflation Reduction Act of 2022, these clean energy tax breaks were set to retire in 2032.
“If you are considering a new EV or (plug-in hybrid electric vehicle), we strongly suggest acting soon before inventory starts to dwindle and the clean vehicle tax credit is gone for good,” noted a July 18 article on leasehackr.com, an online car-leasing community.
Photo by Cassandra Hemenway.
“We are disappointed to see [the federal tax incentive] won’t be available after September,” said David Roberts, coordinator of Drive Electric Vermont (driveelectricvt.com), a statewide public-private partnership. “Combined with the fact that the state of Vermont incentives are not going to be available … we’re not sure what the future holds.”
With just a few weeks left before the federal incentives disappear, local dealerships have been gearing up for a spike in EV sales. McGee Hyundai of Barre sold 40 EVs in August, compared to a more typical 10 to 15, according to Nathaniel Steele, a Barre-based McGee sales advisor.
I have been leasing a Kona Electric from McGee Hyundai since 2023. Last week, I worked with Steele to end my lease two months early so I could get into a new lease before the federal funds end. With a combination of the federal tax incentive, a generous rebate from Green Mountain Power, and an added bonus from Hyundai, plus my own down payment, I was able to lease a 2025 Ioniq 5 XRT for under $250 per month.
While the federal tax incentives are by far the largest currently available at $7,500 for a purchased or leased new EV and up to $4,000 for a used EV, many others still exist, at least in Vermont. Also, federal incentives come with rules, including on where the minerals for batteries are sourced, limits on prices of vehicles, and income guidelines. Drive Electric Vermont lists a total 47 rebates available in Vermont for the purchase or lease of new or used EVs along with rebate-style incentives for other electric-powered items such as e-bikes, electric motorcycles, lawnmowers, EV chargers, and more.
The federal tax incentives have their flaws. They only go into effect for those with a tax liability — that is, if you owe taxes at the end of the year — and then you get reimbursed only up to the amount you owe, up to the reimbursement allotment. If you don’t owe taxes at the end of the year, as is the case for most low- or moderate-income Americans, you’re left out. But there are workarounds, including leasing (in which most dealerships receive the incentive, but immediately pass it back to the customer as a “rebate”). And, as of January 2024, dealerships have been able to pass the tax incentive back to the customer for purchases as well, Roberts said.
In fact, Roberts encourages potential EV customers to ask about that dealership pass-through of the incentive early in the conversation.
Steele, an EV enthusiast himself, is one year into a lease on his own EV. Steele pointed to lower maintenance costs (due to fewer moving parts) on EVs, and the quietness of the ride, as two of the advantages he appreciates in his EV.
Although leases tend to come with lower monthly payments than purchases, Roberts said “if you’re really looking for the lowest cost of ownership over a long period of time, then buy a used one.” With a two- or three-year-old EV, he said, “the battery should have a lot of life in it, and it will have taken that initial depreciation hit. The instant you drive it off the lot, you’re losing a significant amount of value.”
While Vermont, with its 400 charging stations, has among the nation’s highest number of EV chargers per capita, Roberts strongly recommends people charge an EV at home as much as possible. “If in an apartment or condo, make sure to have a charging plan before making a purchase,” he added, noting that the cost for charging is higher at charging stations.
Additionally, among its list of incentives, Drive Electric Vermont includes Green Mountain Power’s reduced rates for vehicle charging, along with a list of utilities that offer cash incentives for installing a home charger.
With about three weeks before the federal tax incentives go away, there’s still time to act. My own process took about three days from start to finish, including researching the options, talking to several dealerships, and sitting down with sales people.
“EVs are here to stay,” Roberts said. Steele agrees.
“I don’t think it’s going to slow down,” he said. “With the right infrastructure and the right funding … EVs can be a way to move to futures like net zero.”