California mulling its own EV incentives after Trump dumps federal tax credits

California is considering giving electric vehicle (EV) buyers cash incentives after the United States federal government drops its incentives from September 2025. 

A California Air Resources Board (CARB) report proposed funding “to replace expiring federal tax credits and expand access to ZEVs [zero emission vehicles] for low-income consumers and small businesses”.

US President Donald Trump included the axing of a $US7500 ($A11,674) tax credit for new purchases/leases and a $US4000 ($A6226) for buying a used EV as part of a bill passed into law on July 4, 2025. 

The bill was vehemently opposed by CEO of electric automaker Tesla, Elon Musk, a former special government employee in the Trump administration.

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Mr Musk took to social media to describe it as “utterly insane and destructive”, saying “It gives handouts to industries of the past while severely damaging industries of the future”.

The bill’s passing means the US government will end funding the incentives after September 30, 2025. 

“As federal agencies move backward, we are moving forward with a set of actions to expand clean and zero emission vehicle adoption across all vehicle types,” CARB chair Liane Randolph told media, according to Automotive News.

While the California government is looking to step in, it’s yet to determine how it might fund such a program, with potentially lower cash amounts than outgoing incentives.

The CARB recommendations also include increasing funding for EV infrastructure, an area California already leads all other US states considerably, as well as looking for ways to reduce EV charging costs for consumers. 

Ahead of the bill passing, California Governor Gavin Newsom passed an executive order on June 12 recommitting the state – the world’s fourth largest economy – to its clean vehicle program. 

Yet the state faces a challenge from Washington, threatening its ability to enact its own emissions regulations – permitted by a waiver from the Environmental Protection Agency (EPA) – which have included fuel economy measures impacting the global auto industry.