The loss of the federal EV tax credit could be a big blow to potential buyers, but California is looking to bridge that gap for its residents. Governor Gavin Newsom’s proposed budget for 2026-2027, released Friday, includes a “Light-Duty Zero-Emission Vehicle (ZEV) Incentive Program,” which details a one-time investment of $200 million.
According to the budget summary, this incentive program is “an important part of the Administration’s strategy to keep ZEVs affordable and accessible to all.” The proposed budget still needs to be passed through the state legislature later this year, but if passed, the new incentives will help continue the momentum of EV adoption across California. According to the California Energy Commission, by the third quarter of 2025, EVs will account for about 30 percent of auto sales in the state.
The budget summary doesn’t provide any details on how the $200 million will actually break down on a per-vehicle basis, but USA Today It was reported that this discount would be an immediate discount “on the hood” for the EV. Previously, buyers could get up to $7,500 in federal tax rebates on new EV purchases and up to $4,000 on used EVs. As for California’s proposed incentives, Lauren Sanchez, chair of the California Air Resources Board, said USA Today The state is still trying to figure out if it will offer tax credits to those buying used EVs.
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