U.S. Senate Republicans on Monday introduced a sweeping tax and budget proposal that would eliminate the $7,500 federal tax credit for new electric vehicle (EV) purchases 180 days after the bill is enacted, marking a significant policy shift from previous pro-EV positions under President Joe Biden’s administration.
The proposal, drafted by the Senate Finance Committee’s Republican members, also calls for the immediate end of the $7,500 credit for leased EVs assembled outside of North America. Leased EVs could still be eligible for the credit for six months following the bill’s passage if they meet North American assembly and content requirements similar to purchased vehicles.
The legislation further seeks to end the $4,000 federal tax credit for used EVs 90 days after enactment. These proposed changes represent a broader effort by Republicans to roll back key incentives that have supported the adoption of electric mobility.
In contrast, the House of Representatives has introduced a separate bill that would maintain the $7,500 tax credit for new EV purchases through the end of 2025, or through 2026 for automakers that have not yet reached the 200,000 vehicle sales cap. The House version also includes provisions for new annual road repair fees on EVs and hybrids, and a phase-out of battery production tax credits by 2028.
The Senate Republican proposal includes a provision that would exempt interest on auto loans from taxes for new vehicles made in the United States through 2028, although this benefit would be phased out for individual filers earning more than $100,000 annually.
The latest legislative effort comes just days after former President Donald Trump signed a resolution blocking California’s plan to ban the sale of new gasoline-only vehicles by 2035 — a policy that had been adopted by 11 other states covering roughly one-third of the U.S. auto market.
While the bill still faces hurdles in Congress and potential pushback from EV advocates and automakers, it signals a shift in federal policy debate over the future of vehicle electrification.