Governor Gavin Newsom has included $200 million in his proposed 2026-2027 budget to support electric vehicle purchases in California. This move aims to offset the loss of federal tax credits and maintain the state's high EV adoption rates. The plan still requires legislative approval later this year.
Governor Gavin Newsom released his proposed budget for the 2026-2027 fiscal year on Friday, January 11, 2026, featuring a one-time allocation of $200 million for a light-duty zero-emission vehicle (ZEV) incentive program. This initiative is described in the budget summary as "a critical part of the Administration's strategy to keep ZEVs affordable and accessible for all."
The proposal comes amid concerns over the expiration of federal EV tax credits, which previously offered up to $7,500 for new vehicles and $4,000 for used ones. California, a leader in EV adoption, saw nearly 30 percent of its auto sales as electric vehicles in the third quarter of 2025, per data from the California Energy Commission. If approved by the state legislature later in 2026, the funding would help sustain this momentum.
Details on the distribution of the $200 million remain unclear, with the budget summary not specifying per-vehicle amounts. Reports indicate the incentives could take the form of an "on the hood" instant discount at purchase. Regarding used EVs, Liane Randolph, chairwoman of the California Air Resources Board, stated to USA Today that officials are still determining whether to include tax credits for secondhand vehicles.
This program underscores California's commitment to clean transportation through bodies like the California Energy Commission and the Air Resources Board, even as federal support wanes.
