The Tax Benefits of Buying an Electric Vehicle

If you’re thinking about going electric, you’re not alone—and there’s never been a better time to make the switch. EV incentives in 2025 are designed to reward buyers like you with thousands in potential savings.

The EV Tax Benefits of buying a car include up to $7,500 in federal credits for new EVs and up to $4,000 for used ones, plus charger installation credits and local utility rebates—making the switch to electric more affordable than ever.

These savings can significantly reduce your vehicle’s purchase price, lower your monthly payment, and help you recover costs faster than with a traditional gas-powered car. Backed by verified federal guidelines, expert dealer insights, and McKinney-area resources, this guide is your one-stop source for turning EV tax perks into real financial wins. Let’s break down how drivers across McKinney, Plano, Frisco, and Prosper can take full advantage of these benefits—and avoid the common mistakes that cost buyers thousands.  

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Summary:  

• Federal EV tax credits offer up to $7,500 for new vehicles and $4,000 for used ones—and can now be applied instantly at the dealership for immediate savings.
• McKinney-area buyers can stack incentives, including charger installation credits, utility rebates, and low-APR dealer financing to unlock over $10,000 in total value.
• Timing and strategy matter—knowing how and when to buy (and which models qualify) ensures you get every dollar you’re entitled to.  

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What Are the Federal EV Tax Credits in 2025?

Federal EV tax credits in 2025 offer up to $7,500 on new electric vehicles and up to $4,000 on used models, depending on income, vehicle price, and battery sourcing. New cars must be assembled in North America and meet strict pricing caps—$55,000 for sedans, $80,000 for SUVs and trucks.  

As of 2024, buyers can now transfer the tax credit to the dealership for an instant price reduction, which lowers the loan amount and reduces interest paid over time. These savings can make a significant difference for North Texas buyers comparing the cost of EVs to gas-powered alternatives.

Do I Qualify for EV Tax Incentives in Texas?

Qualifying for federal and local EV tax incentives in Texas depends on your modified adjusted gross income (AGI) and the vehicle’s specs. Single filers must earn less than $150,000, while joint filers are capped at $300,000.  

Used EV credits require a lower income threshold (under $75,000 single/$150,000 joint) and are only available on models over two years old and priced at $25,000 or under. Be sure to check your income from the current or previous year, as either can qualify—and if you're on the edge, consider timing your purchase for better eligibility.

Are There Any Local EV Benefits in McKinney, TX?

Even though Texas doesn’t currently offer a state-level EV purchase rebate, McKinney-area drivers still have access to a variety of local perks and savings. From waived fees to regional infrastructure support, these benefits can help reduce the overall cost of EV ownership.

• No State Emissions Test – EVs are exempt from Texas' annual emissions inspection, saving you about $25.50 per year.
• Home Charger Rebates – Utility providers like Oncor and TXU Energy offer up to $500 in rebates for installing a Level 2 home charger.
• Expanded Charging Network – Dallas features over 500 public charging stations, making it easier to stay charged on the go without paying a premium.
• Installation Incentives – Pairing utility rebates with the federal EV charger tax credit can dramatically reduce or even eliminate out-of-pocket installation costs.

Local incentives may not be flashy, but they add up over time and make EV ownership far more affordable than many drivers expect. As charging infrastructure continues to expand throughout Collin County and the Dallas metro, McKinney EV owners will see even more long-term convenience and value.

How to Maximize EV Tax Benefits When Buying a Car

Strategic buyers can unlock thousands in savings by stacking multiple EV incentives available at the federal, local, and dealership levels. With the right timing and approach, your EV purchase can become significantly more affordable—both up front and over time.

• Combine Incentives – Pair the $7,500 federal EV tax credit with utility rebates and dealer offers to maximize total savings.
• Use the Instant Credit Transfer – Applying the credit at the dealership reduces your loan amount, saving you money on interest and monthly payments.
• Time Your Purchase – Look for year-end clearance events or model-year transitions, where “slow-moving” inventory may qualify for thousands in discounts.
• Explore Leasing Options – Leasing can help buyers sidestep income limits and still benefit from tax credits embedded in lower monthly payments.
• Stack Charger Credits – Don’t forget the 30% federal tax credit for charger installation, which can be combined with local rebates for additional savings.

The key is coordination—knowing what’s available and when to act can mean the difference between good savings and great savings. If you’re buying in the McKinney area, staying flexible with your vehicle choice and watching local incentives closely can make all the difference.

What EV Charger Tax Credits Are Available in Texas?

In addition to vehicle incentives, EV buyers can claim a 30% federal tax credit for home charger installation, up to $1,000. This credit applies to both the cost of the charger and the installation, and can be combined with utility rebates for maximum savings. Some McKinney homeowners have covered nearly the full cost of a Level 2 charger by pairing the federal credit with rebates from local energy providers.  

Installing a charger at home not only adds convenience but boosts long-term savings by avoiding public charging fees. Just be sure to keep all receipts and use a certified electrician to ensure the installation qualifies.

A Final Word on the EV Tax Benefits of Buying a Car at Honda Cars of McKinney

Electric vehicles aren’t just a smart environmental choice—they’re a financially strategic one, especially when you stack federal tax credits, charger rebates, and dealer incentives the right way. With McKinney’s proximity to Dallas' robust charging network and Collin County's utility rebates, the path to affordable EV ownership is wide open. From instant dealer-applied tax credits to nearly free home charger installations, there’s never been a better time to switch to electric.

At Honda Cars of McKinney, we’ll walk you through every step—helping you understand what you qualify for, which EV models make the most sense for your needs, and how to maximize your total savings. Stop by and explore our selection of hybrid and electric vehicles today at 601 S Central Expy, McKinney, TX 75070 or call us at 833-620-2877 to schedule your test drive. Your electric future starts here.
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Frequently Asked Questions

Are There Additional Savings Beyond The Federal Tax Credit?

Yes, McKinney-area drivers can stack multiple incentives including a 30% federal tax credit (up to $1,000) for home charger installation, utility rebates from providers like Oncor, and dealer financing specials. EVs are also exempt from Texas emissions testing, saving about $25.50 annually. Combined properly, these incentives can potentially save you over $10,000 on your electric vehicle purchase.

How Much Can I Actually Save With Federal EV Tax Credits?

You can save up to $7,500 on new electric vehicles and up to $4,000 on used EVs through federal tax credits. The exact amount depends on factors like battery sourcing, vehicle price, and your income level. As of 2024, these credits can be applied instantly at the dealership, reducing your purchase price and lowering monthly payments.

Which Honda Models Qualify For The Full Tax Credit?

The Honda Prologue currently qualifies for federal EV tax incentives, though specific credit amounts may vary based on battery components and assembly location. Visit our showroom in McKinney to learn which models in our current inventory meet the latest qualification requirements. Our sales team stays updated on which vehicles qualify for the maximum incentive.

What Income Requirements Must I Meet For EV Tax Credits?

For new electric vehicles, your modified adjusted gross income must be below $150,000 for single filers or $300,000 for joint filers. Used EV credits have lower thresholds at $75,000 for individuals and $150,000 for joint filers. We can help determine which year’s income (current or previous) might be most advantageous for your purchase timing.

How Do I Apply For The EV Tax Credit When Purchasing At Honda Cars Of McKinney?

The process is simple—our finance team can handle the tax credit transfer at the time of purchase, giving you instant savings rather than waiting for tax season. Just bring your tax documentation showing your income eligibility, and we’ll apply the credit directly to your purchase price. This reduces both your loan amount and the interest you’ll pay over the life of your financing.