Today is the last day to get the $7,500 EV tax credit

Buyers in the US looking to take advantage of the federal electric vehicle tax credit have one last day to hunt for a good deal.

Wording in the One Big Beautiful Bill Act that killed the $7,500 federal EV tax credit set a hard Sept. 30 deadline for claiming the tax credit, but the IRS is giving buyers and automakers a break by allowing a “written binding contract” for the purchase of the vehicle to qualify for the credit in lieu of delivery of that vehicle by Sept. 30.

Over the weekend, automakers like GM (GM), Ford (F), Tesla (TSLA), and Rivian (RIVN) tried to entice Americans to go electric. Tesla even updated its website to say “order by September 30” and included a countdown clock on the site.

However, despite the ongoing coverage of the tax credit’s expiration by traditional media and social sites, it appears that a significant percentage of Americans don’t understand how the credits work.

“While most shoppers have heard of the credit, a recent study from Cars.com shows only about a third really understand how it works,” Cars.com Detroit bureau chief Aaron Bragman said to Yahoo Finance.

“That’s important, because nearly 80% of car shoppers considering EVs say it factors into their decision to go electric, and almost half say they might speed up their plans before the deadline hits,” he added.

Read more: Why electric car insurance will cost you more and how to save

Here’s how the rules work.

To be eligible, the EVs need to be assembled in North America and must also prove battery materials and components do not originate from countries deemed foreign entities of concern (FEOC), which includes China, Russia, and North Korea. A full list of eligible vehicles is available on the fueleconomy.gov website.

Once that’s out of the way, there are price restrictions. For vehicles like coupes and sedans, the MSRP limit to get the tax credit is $55,000. For trucks and SUVs, the limit is $80,000.

Then, buyer income must be limited to $300,000 in adjusted gross income for joint filers or $150,000 for individual filers to qualify.

Finally, there is the lease exemption. Under the law, leasing EVs falls under the commercial EV credit of the law (known as the 45W credit for commercial clean vehicles), which doesn’t require North American assembly or income requirements.

Basically, the rule says any taxpayer (and automaker) leasing a clean vehicle to customers is eligible to claim the commercial EV credit, meaning every foreign automaker from Kia (000270.KS) to Mercedes (MBGAF) qualifies, as well as very expensive EVs from any automaker.

Another part of the confusion is how the credit is paid out.

The past version of the federal EV tax credit only allowed the taxpayer to apply for a “credit” of $7,500 when filing their annual tax return. Now, for EV purchases purchased under the current law, dealers are able to deduct the amount at “point of sale,” meaning they can take the credit at the time of purchase and file with the IRS later. A similar scheme is in place with leases, with the $7,500 deducted from the buyer’s lease payments across the length of the contract immediately.

Buyers should also be on the lookout for any automaker incentives aimed at moving inventory.

“Some automakers and dealers are also offering their own discounts and financing deals, which can stack on top of the credit to bring prices down even more. And don’t forget—many states and cities offer their own incentives that will still be around even after the federal program ends,” Cars.com’s Bragman said.

Indeed, the state of New York offers a $2,000 “Drive Clean Rebate” for some vehicles, and California offers up to $7,000 in rebates for eligible buyers.

But buyers need to act now to “stack” dealer and local offers with the big federal tax credit.

“Time is running out for anyone thinking about buying or leasing an electric vehicle,” Bragman said, adding that if you want to get the federal EV tax credit savings, “Don’t wait.”

Pras Subramanian is the lead auto reporter for Yahoo Finance. You can follow him on X and on Instagram.

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