By Emily Sanchez

For more than a decade, the biggest financial incentive for buying an electric vehicle in the United States came from the federal government — that changed in 2025. Starting August 2026, California has stepped in with its own program, MyFirstEV, aimed at first-time EV buyers. In this post, I will discuss how the two subsidies compare, what happened to the federal credit, how the state’s replacement works, and what the numbers say about each program’s impact.

What Happened to the Federal EV Tax Credit?

The federal Clean Vehicle Credit (EV tax credit) was created under the Energy Improvement and Extension Act of 2008 and substantially expanded by the 2022 Inflation Reduction Act (IRA). At its peak, it offered up to $7,500 for a new EV or plug-in hybrid and up to $4,000 for a used one, along with a separate commercial vehicle credit worth up to $40,000.^[1]

That ended with the One Big Beautiful Bill Act (OBBBA), signed into law on July 4, 2025. The legislation eliminated the new, used, and commercial clean vehicle credits for any vehicle acquired after September 30, 2025, years earlier than the credits’ original 2032 expiration date.^[2] Buyers who signed a binding purchase contract and made at least a nominal payment before the cutoff could still claim the credit on their tax return, but for anyone buying after that date, the federal incentive is simply gone. (A separate, smaller credit for home EV charging equipment survived a bit longer, running through June 30, 2026.)^[3]

Enter MyFirstEV

California didn’t wait long to fill part of the gap. Signed into law in July 2026 through SB 168 and launched in August, MyFirstEV is a state rebate aimed specifically at Californians buying or leasing their first zero-emission vehicle (ZEV, a category that includes both battery-electric and hydrogen fuel-cell vehicles).

How it works:

• $3,500 off a new ZEV with an MSRP of $50,000 or less^[4]
• $1,750 off a used ZEV priced at $25,000 or less through a manufacturer’s certified pre-owned program^[5]
• An exception to the price caps for vehicles from participating automakers with a headquarters in California (Rivian and Lucid), those qualify for the rebate regardless of retail price^[6]
• There is no income cap, and the discount can be stacked with other programs like the Driving Clean Assistance Program and Clean Cars 4 All^[7]

Funding: The program totals roughly $271 million, $135.5 million from the state budget, matched dollar-for-dollar by participating automakers.^[8] The California Air Resources Board (CARB) estimates that it could support more than 73,000 vehicle transactions.^[9]

How to get it: There’s no advance application. Buyers simply go to a participating dealership, sign a document declaring it’s their first EV purchase or lease, and the discount is applied instantly, built directly into the sales contract.^[10]

Participating automakers: Hyundai, Lucid, Chevy, Ford, Genesis, Kia, and Rivian were active at launch. Cadillac, Honda, Lexus, Mitsubishi, Subaru, Toyota, and Volvo joined in September 2026, with Nissan expected to follow.^[11] Tesla also participated at launch, and its allocation sold out in just four days.^[12]

Side-by-Side Comparison

	Federal Clean Vehicle Credit (expired)	California MyFirstEV
New vehicle amount	Up to $7,500	$3,500
Used vehicle amount	Up to $4,000	$1,750
Eligibility	Income caps applied; open to repeat EV buyers	No income cap; first-time ZEV buyers only
Price cap (new)	$80,000 (trucks/SUVs), $55,000 (cars)	$50,000 (waived for CA- headquartered automakers)
How you got it	Claimed on a tax return, or (starting 2024) transferred to the dealer as an upfront discount	Instant point-of-sale discount, no tax filing
Geographic scope	Nationwide	California residents only
Status	Ended for vehicles acquired after September 30, 2025	Active as of August 2026, first-come-first-served until funds run out

Program Performance

The federal credit moved a large number of vehicles and a large amount of money. In 2023, its first full year in expanded form, U.S. EV sales rose about 50% year-over-year, and motorists received an estimated $3.3 billion in credits that year alone.^[13] After the IRS began allowing buyers to transfer the credit to dealers for an instant discount in January 2024, uptake accelerated quickly: within about five months, the federal government had issued more than $1 billion in upfront credits, with roughly 90% of new-EV buyers choosing the instant-rebate option over waiting to file taxes.^[14] More than 100,000 time-of-sale reports had been filed by that summer, including over 15,000 for used vehicles.^[15]

The used-vehicle version of the credit saw much lower take-up than the new-vehicle credit, about 28,000 claims in 2023 compared to roughly 488,000 for the new-vehicle credit, which researchers attributed partly to lower awareness and partly to the relatively small pool of qualifying used EVs.^[16] A 2024 National Bureau of Economic Research working paper found that, compared with having no credit at all, the IRA’s version generated close to a dollar of economic benefit for every dollar spent.^[17]

MyFirstEV is too new to have a comparable performance record, but early signals suggest strong demand relative to its size. The program launched in phases starting August 3, 2026, with Hyundai, Lucid, and Tesla first out of the gate.^[18] Funding is split evenly among the participating manufacturers, with half of the funding coming from the state and the other half from the manufacturer. Tesla’s slice of the funding was completely exhausted within four days, with the pace of claims accelerating sharply in the final hours before funds ran out.^[19] That kind of rapid depletion suggests real demand among first-time buyers, though it also means the program’s total reach will likely be constrained by funding rather than by eligibility, and CARB has not indicated whether or when it might replenish an automaker’s allocation once it runs out.^[20]

The Bottom Line: MyFirstEV is the First Step to Filling the Gap Left by the Federal Government

The federal credit was bigger per vehicle, open to a broader pool of buyers nationwide, over its several years of operation moved billions of dollars and added a meaningful number of additional EV sales. MyFirstEV is smaller in dollar terms and narrower in eligibility (California residents buying their first ZEV only), but it’s built for speed: no tax return, no waiting, money off at the point of sale. MyFirstEV is also designed to increase a new pool of EV owners by specifically targeting first time buyers. The program is also flexible in that it can be stacked with other grants, including income-based grants. Early demand, visible in how quickly Tesla’s initial allocation disappeared, suggests California’s replacement, while more modest, is landing with buyers.

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[1] Beancount.io, “The EV Tax Credit: What Happened, What’s Next, and What You Can Still Claim,” April 2026. https://beancount.io/blog/2026/04/20/ev-tax-credit-complete-guide

[2] Consumer Reports, “Electric Cars and Plug-In Hybrids That Qualified for Federal Tax Credits,” updated October 2025. https://www.consumerreports.org/cars/hybrids-evs/electric-cars-plug-in-hybrids-that-qualify-for-tax-credits-a7820795671/

[3] id.

[4] CalMatters, “California’s new EV rebate: how to get it,” August 2026. https://calmatters.org/economy/2026/08/california-ev-rebate-how-to-get/

[5] id.

[6] Office of Governor Gavin Newsom, “Governor Newsom announces $3,500 instant rebates now available for Californians buying their first zero-emission vehicle,” August 2026. https://www.gov.ca.gov/2026/08/07/governor-newsom-announces-3500-instant-rebates-now-available-for-californians-buying-their-first-zero-emission-vehicle/

[7] id.

[8] id.

[9] Coltura, “Electric Car Incentives in California in 2026.” https://coltura.org/electric-vehicle-rebate-california/

[10] Office of Governor Gavin Newsom, “Governor Newsom announces $3,500 instant rebates now available for Californians buying their first zero-emission vehicle,” August 2026. https://www.gov.ca.gov/2026/08/07/governor-newsom-announces-3500-instant-rebates-now-available-for-californians-buying-their-first-zero-emission-vehicle/

[11] id.

[12] Basenor, “California’s MyFirstEV Program, Explained in 6 Points,” August 2026. https://www.basenor.com/blogs/news/californias-myfirstev-program-explained-in-6-points

[13] Reason, “Starting today, electric vehicle buyers no longer get a federal tax credit,” October 2025. https://reason.com/2025/10/01/starting-today-electric-vehicle-buyers-no-longer-get-a-federal-tax-credit/

[14] CNBC, “More than $1 billion in EV tax credits issued upfront to buyers, Treasury and IRS say,” June 2024. https://www.cnbc.com/2024/06/12/1-billion-in-ev-tax-credits-issued-upfront-to-buyers-say-treasury-irs.html

[15] U.S. Department of the Treasury, “After just three months, the Inflation Reduction Act (IRA) has saved Americans an estimated $600 million on clean vehicle purchases at the time of sale,” 2024. https://home.treasury.gov/news/featured-stories/after-just-three-months-the-inflation-reduction-act-ira-has-saved-americans-an-estimated-600-million-on-clean-vehicle-purchases-at-the-time-of-sale

[16] Congressional Research Service, “Economic Perspectives on Electric Vehicle Tax Credits,” Congress.gov, August 2025. https://www.congress.gov/crs-product/IF13089

[17] Reason, “Starting today, electric vehicle buyers no longer get a federal tax credit,” October 2025. https://reason.com/2025/10/01/starting-today-electric-vehicle-buyers-no-longer-get-a-federal-tax-credit/

[18] CalMatters, “California’s new EV rebate: how to get it,” August 2026. https://calmatters.org/economy/2026/08/california-ev-rebate-how-to-get/

[19] Basenor, “California’s MyFirstEV Program, Explained in 6 Points,” August 2026. https://www.basenor.com/blogs/news/californias-myfirstev-program-explained-in-6-points

[20] id.