Under OBBB, a lot of energy credits are getting eliminated.
I wanted to discuss them a bit so you can be aware of the changes.
If you place in service a new plug-in electric vehicle (EV) or fuel cell vehicle (FCV), you may qualify for a $7,500 clean vehicle tax credit.
The new law removes this credit as of October 1, 2025. This means that you have to take delivery of this car (or “place in service”) on or before September 30, 2025 (~75 days). If you were already planning to do so, it might make sense to do it before the deadline.
A bit more details:
• Per 2024 regulations, this Clean Vehicle Tax Credit must be initiated and approved at the time of sale, but some rules:
• The MSRP of a pickup truck, van, or SUV must be $80,000 or less; for all other passenger vehicles, $55,000 or less.
• Final assembly must be in North America.
• See car list here.
Your adjusted gross income for either the current or prior year must be:
❯ $300,000 or less for joint filers and surviving spouses,
❯ $225,000 or less for head of household filers, or
❯ $150,000 or less for single.
This credit could actually be combined with the new legislation on auto loan interest deduction.
Let me briefly cover it:
Tax deduction on car loan interest
The new tax bill allows a maximum deduction of $10,000 for auto loan interest. To receive the full $10,000 deduction, your gross income for the year must be less than $100,000 (single) or $200,000 (married).
The deduction is unavailable at $150,000 (single) or $250,000 (married) gross income.
The car must be new (“the original use of which commences with the taxpayer”), and the loan must be incurred after December 31, 2024, not before.
The car must have at least 2 wheels and weigh under 14,000 lbs. ATVs, trailers, and campers are not eligible. Lastly, the final assembly of the car must take place in the U.S.
“Final assembly” means the car is finished at a U.S. plant or factory and sent to a dealer.
Of course, don’t just buy a new car because the interest is now deductible. Run the numbers. Perhaps slightly used might make more sense with the below credit…
If you buy a qualified used electric vehicle (EV) or fuel cell vehicle (FCV) from a dealer for $25,000 or less, you could qualify for the used clean vehicle tax credit (worth 30% of the sale price, up to a maximum of $4,000). The non-refundable tax credit is a direct reduction of your tax liability.
The tax bill changes the deadline to September 30, 2025, as with the previously discussed new vehicle EV credit.
Some qualification rules for the used EV credit:
- Must buy from a dealer
- Sale price of less than $25,000 (doesn’t include taxes or title/registration fees)
- Model must be 2 years earlier than the calendar year (a car bought in 2025 needs a model year of 2023 or older)
- Be an eligible car (see list here)
In addition, your adjusted gross income (AGI) may not exceed:
❯ $150,000 for married filing jointly or a surviving spouse
❯ $112,500 for heads of household
❯ $75,000 for single
The Residential Clean Energy Credit is 30% of the costs of new, qualified clean energy property for your home installed.
Some expenses include:
- Solar electric panels
- Solar water heaters
- Geothermal heat pumps
- Fuel cells
The new law removes this credit as of January 1, 2026. The requirement of “placed in service” is replaced with a deadline for incurring expenses of December 31, 2025.
So, the new solar panels you want to install don’t have to be “placed in service” as of December 31, 2025, but rather the expenses must be incurred by December 31, 2025.
If you make qualified energy efficient improvements to your home, you may qualify for a tax credit of up to $3,200.
The maximum credit you can claim is:
- Exterior doors ($250 per door and $500 total)
- Exterior windows and skylights ($600)
- $2,000 for qualified heat pumps, water heaters, biomass stoves, or biomass boilers
The new tax bill changed the deadline to December 31, 2025 (instead of December 31, 2032). The improvements must be “placed in service” before the deadline, not just expenses incurred.
I hope this helps you understand the changes.
See you next Saturday.
MC, CPA