Key Points
- California Governor Gavin Newsom has proposed a $200 million EV incentive program.
- The plan is designed to replace the recently expired federal EV tax credit.
- The incentive would be an “on-the-hood” instant discount at the dealership.
- In the third quarter of 2025, nearly 30% of cars sold in California were EVs.
California is stepping up to help its residents purchase electric vehicles now that the federal EV tax credit has expired. Governor Gavin Newsom’s new 2026-2027 budget proposal includes a one-time $200 million fund to establish a new “incentive program” for zero-emission vehicles.
The goal is to keep EVs “affordable and accessible for all,” according to the budget summary. The loss of the $7,500 federal tax credit was a major blow to the EV market, and California is concerned it will slow the state’s progress toward a greener future.
In the third quarter of 2025, nearly 30% of all cars sold in California were electric, and the state wants to sustain that momentum.
The budget proposal still needs approval from the state legislature, but if it passes, it could be a significant win for car buyers. Unlike the old federal credit, which you had to claim on your taxes, this new incentive would be an “on-the-hood” instant discount. That means the car’s price would be reduced at the dealership.
The budget summary doesn’t specify the rebate amount per car, but it’s a clear signal that California is serious about supporting the EV market. It’s still unclear whether the state will offer incentives for buyers of used EVs, which were previously eligible for a $4,000 federal credit.
For now, California residents who were hoping to buy an EV in 2026 have a new reason to be optimistic. If Newsom’s plan is approved, the Golden State will once again lead the transition to electric transportation.
