Savvy Car Buyers Exploit Loophole, Stack Trump and Biden Tax Credits to Save Thousands

 

WASHINGTON D.C. – July 5, 2025
A remarkable legislative quirk, born from a rare intersection of policies from two different administrations, has created an unexpected windfall for American car buyers. Astute consumers have discovered they can "stack" a reinstated Trump-era manufacturing tax credit with a Biden administration green energy credit, leading to savings of over $8,000 on specific new vehicles.

The phenomenon stems from the recently passed "Bipartisan Manufacturing and Energy Act," a compromise bill aimed at boosting both domestic production and clean energy adoption. In a strange twist of legislative sausage-making, the act reinstated a version of the "America First Vehicle Manufacturing Credit" (a Trump-era initiative) while simultaneously expanding the "Clean Future Vehicle Credit" (a cornerstone of the Biden agenda).

Analysts are calling it a "legislative unicorn," as the two credits were never intended to be used in tandem. Here’s how the stacking works:

The Credits in Question

• The "America First" Credit (Trump-era):
  This provides a $3,500 tax credit for purchasing any new vehicle where over 75% of its components, including the engine and chassis, are sourced and assembled in the United States. This credit was designed to support traditional internal combustion engine (ICE) manufacturing jobs.

• The "Clean Future" Credit (Biden-era):
  This provides a $5,000 tax credit for purchasing a new vehicle with a battery pack larger than 15 kWh, intended to incentivize the adoption of electric vehicles (EVs) and plug-in hybrids (PHEVs).

The loophole exists for a specific type of vehicle: American-made Plug-in Hybrids (PHEVs).

These vehicles have both a traditional internal combustion engine—often qualifying them for the "America First" credit—and a sufficiently large battery pack to qualify for the "Clean Future" credit.

The Perfect Storm of Policies

"It's an alignment of the political planets that no one saw coming," said automotive industry analyst Sarah Jenkins of AutoMarket Insights. "You have a policy rewarding legacy manufacturing and another rewarding green technology, and a handful of vehicles are sitting right in the middle of that Venn diagram. It's a gold rush for consumers who do their homework."

Automakers like Ford, General Motors, and Stellantis are seeing a massive surge in demand for their PHEV models, such as the Ford Escape PHEV and Jeep Wrangler 4xe, which are assembled in the U.S. and meet the criteria for both credits.

"We can't keep them on the lot," said one Midwest Ford dealer. "Once people hear they can effectively get $8,500 back from the government by combining these two credits, the conversation changes instantly. We've sold more plug-in hybrids this month than we did in the entire last quarter."

The Political Fallout

The unintentional loophole has sent lawmakers on both sides of the aisle scrambling. Republicans who championed the manufacturing credit are reportedly dismayed that it is subsidizing vehicles with electric batteries, while some Democrats are concerned that a green energy credit is being paired with a policy rewarding fossil-fuel engine production.

"This wasn’t the intent," said Senator Linda Graves (R-TX), who co-sponsored the manufacturing credit. "We wanted to incentivize American-made cars, not fuel a hybrid market that could still run on gas."

Meanwhile, Democrats argue that the Biden administration’s clean energy agenda has been diluted. Representative Emma Dawson (D-CA) expressed frustration, saying, “It’s frustrating to see hybrid vehicles with gas engines benefiting from the credit meant to promote a clean future.”

Sources on Capitol Hill suggest that a legislative "fix" to close the loophole is already being discussed, but for now, the window of opportunity remains open. Financial advisors are urging potential buyers to act quickly and consult with a tax professional to ensure both their income level and the specific vehicle's VIN qualify before making a purchase.

What This Means for Consumers

For now, consumers have the chance to take advantage of the stacked credits before any changes are made. One auto buyer in Atlanta, Georgia, confirmed, "I didn’t even know it was possible to get both credits, but when my dealer mentioned it, I did some research. It’s a no-brainer. I'm saving over $8,000, and I get a vehicle that’s better for the environment. It’s a win-win."

As the credits have gained popularity, experts are warning that the timeline for purchasing may be short. Should lawmakers act swiftly, the overlapping credits may be phased out, but for those willing to navigate the complex rules, the savings are significant.

Related Questions and Answers

Q: How much can consumers save by stacking the Trump and Biden tax credits?
A: Consumers can save up to $8,500 by stacking the America First Vehicle Manufacturing Credit ($3,500) and the Clean Future Vehicle Credit ($5,000) on eligible plug-in hybrid vehicles.

Q: Which vehicles qualify for both credits?
A: American-made Plug-in Hybrid Electric Vehicles (PHEVs), such as the Ford Escape PHEV and Jeep Wrangler 4xe, meet the criteria for both credits.

Q: How long will the opportunity to stack these credits last?
A: While there is no official timeline, discussions on Capitol Hill suggest lawmakers may move quickly to close the loophole.