California governor plans to set aside $200 million for state tax credits for electric vehicles

The loss of federal tax credits for electric vehicles This may have been a blow to potential buyers, but California wants to fill this gap for its residents. Gov. Gavin Newsom’s proposed 2026-27 budget, which was released Friday, includes a “zero-emission light-duty vehicle (ZEV) incentive program” that details a one-time $200 million infusion.

According to the budget summarythis incentive program is “a critical part of the administration’s strategy to keep ZEVs affordable and accessible to all.” The proposed budget still must pass the state legislature later this year, but if passed, the new incentive would help continue the momentum of electric vehicle adoption across California. In the third quarter of 2025, the state saw nearly 30 percent of automobile sales are electric vehicles, according to the California Energy Commission.

There are no details in the budget summary describing exactly how the $200 million would be distributed per vehicle, but The United States today said the rebate would be an instant “on the hood” rebate for electric vehicles. Previously, buyers got up to $7,500 in federal tax rebates on new electric vehicle purchases and up to $4,000 on used electric vehicles. Regarding California’s proposed incentives, California Air Resources Board Chair Lauren Sanchez said The United States today that the state is still trying to determine whether it will offer tax credits to those who buy used electric vehicles.