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Key Takeaways
Governor Gavin Newsom announced a proposal this month to pursue state funding for EV incentives following the repeal of the federal EV tax credit.
The proposal is intended to offset the loss of federal support for electric vehicle buyers and maintain momentum in California’s zero-emission vehicle goals.
Funding for the state-level EV tax credit would require legislative approval as part of California’s budget process.
The move underscores California’s effort to continue advancing EV adoption amid shifting federal clean transportation policies.
California Governor Gavin Newsom announced this month that he is seeking $200 million in state funding to provide electric vehicle (EV) tax rebates to offset the loss of the federal EV tax credit, which was recently eliminated under legislation supported by President Donald Trump.
Under the federal One Big Beautiful Bill Act, the $7,500 federal tax credit for new EVs and a $4,000 credit for used EVs expired on September 30, 2025, leaving buyers without a previously significant incentive to purchase these zero-emission vehicles.
Governor Newsom’s proposal, included in California’s 2026–2027 state budget plan, would create a new state-funded EV rebate program aimed at helping California residents afford zero-emission vehicles. Although the details, such as the amount per vehicle, eligibility requirements, and income caps, have not yet been finalized, the initiative is intended to be run through the California Air Resources Board and would provide up-front discounts at the point of sale.
Newsom’s plan is a direct response to declines in EV sales following the federal credit’s expiration and broader rollbacks of federal clean-vehicle incentives earlier last year. California has long been a leader in clean transportation policy, with ambitious goals to reduce emissions and transition away from gasoline-powered vehicles. Prior to the 2025 federal changes, California operated its own Clean Vehicle Rebate Program, which provided nearly $1.5 billion in rebates and supported incentives for more than 586,000 vehicles between 2013 and 2023.
The proposed $200 million program will require approval from the state legislature, where budget negotiations are ongoing. Lawmakers are set to debate the measure as part of California’s broader fiscal priorities, which include healthcare, education, wildfire resilience, and other clean energy investments.
