Senate Republicans released a revised tax and budget bill on Friday that would accelerate the phase-out of the federal EV tax credits for new and used electric vehicle purchases and leases.
Under the proposal, the $7,500 credit for new EVs and $4,000 tax credit for used EVs would end on September 30, a significantly shorter timeline than previously proposed.
The earlier version of the bill had allowed a 180-day grace period for new vehicle sales, 90 days for used vehicles, and an immediate end to leased EV tax credits for models not assembled in North America or failing to meet domestic content requirements.
In addition to the EV credit rollback, the bill eliminates penalties for automakers that fail to meet Corporate Average Fuel Economy (CAFE) standards. This move eases regulatory pressure on manufacturers, giving them increased flexibility to continue building gas-powered vehicles.
The legislation also introduced a tax break that allows Americans to exempt the interest paid on auto loans from their taxable income through 2028, provided the vehicle is manufactured in the U.S. However, the benefit is phased out for individual taxpayers earning more than $100,000 annually.
Notably, Senate Republicans dropped a provision from the earlier draft that would have required the U.S. Postal Service to abandon its electric vehicle fleet and related charging infrastructure. The Postal Service, which currently operates 7,200 EVs from Ford and Oshkosh Defense, warned that scrapping the fleet would cost $1.5 billion. The measure was removed after the Senate parliamentarian ruled it was not allowable under budget rules.
