Vehicle Energy Performance Act of 2025

This bill would create a refundable tax rebate for buying a new car or light truck that is more fuel‑efficient than the typical new vehicle from the prior model year. The better the car’s combined fuel‑economy rating (measured in miles per gallon equivalent), the larger the rebate—up to $5,000. Vehicles must be from model year 2027 or later, bought or leased for your own use (not for resale), and meet federal clean air and safety rules.

The rebate is refundable (you can get it even if you owe little or no tax) and you can choose to transfer it to the dealer to get an immediate price cut. If you transfer it, the dealer must lower the price by the full rebate amount, and you generally cannot also claim the separate federal vehicle credit under section 30D for the same car unless you opt out of this rebate.

• Who is affected

  • Car and light‑truck buyers and lessees who choose more efficient models.
  • Dealers that can accept a transferred rebate and apply it as a discount.
  • Auto manufacturers, who must report each model’s fuel economy; Treasury will publish the “median” and “best” numbers used to calculate rebates.

• What changes

  • New rebate up to $5,000, scaled to how much better your vehicle’s fuel economy is than last year’s typical new car.
  • One rebate per vehicle; amounts rise with inflation after 2027.
  • Cars must meet federal clean air and safety standards to qualify.

• When

  • Applies to vehicles from model year 2027 and later.
  • Manufacturers begin reporting in 2026; Treasury issues yearly benchmarks after that; agencies must set rules within a year of enactment.