Trump ended tax credits for electric school buses. How this could affect Valley districts

With the start of the new federal fiscal year on Oct. 1 came the end of a tax credit school districts had been using to electrify their fleets of buses.

The Biden-era Inflation Reduction Act allocated money for clean energy vehicles, including electric school buses. It was supposed to last through the end of 2032, but the One Big Beautiful Bill Act ended them at the end of September.

According to the Electric School Bus Initiative, Arizona districts had nearly 230 electric school buses committed, but only 49 that either have been delivered or are operating.

With the tax credit ending, those numbers — both in Arizona and around the country — may not see much increase.

Julia Gentin has covered climate education at The Hechinger Report. She joined The Show to discuss the status of states, districts and schools that were banking on being able to change out some of their bus fleets to electric?

Full conversation

JULIA GENTIN: Well, basically under the Biden-era Inflation Reduction Act, schools were going to be able to have this tax credit for electric vehicles for the next seven years. So, it was set to expire in 2032. But now, under the One Big Beautiful Bill Act, or H.R. 1, any electric vehicle that is acquired after September 30 of this year, 2025, will not be eligible for tax credits.

MARK BRODIE: So does that mean that there are likely going to be fewer electric school buses on the roads around the country than districts maybe had thought?

GENTIN: Yeah, for schools that have already purchased their buses but not yet received them, they are going to be OK and they can still continue to receive that tax credit because they've entered into this contract and purchased the buses. But for schools that have had considered for more long term, you know, adding the electric school buses, they will not be able to receive the tax credit if they haven't been purchased by Sept. 30.

BRODIE: Do you have a sense of how many buses or what percentage of electric school buses this might entail, in terms of districts that had been hoping to have them that will not be able to get them because they don't have the tax incentive anymore?

GENTIN: I would say I don't have a number on that, but the amount that it could affect per vehicle from the loss of these tax credits would be about $40,000. So for districts that were considering, or who had these in more of a long-term net zero energy-type resolution, they would not be able to count on federal funding anymore in that form.

BRODIE: What did some of the districts with whom you spoke for your reporting tell you that they planned to do?

GENTIN: Well, I talked to the Los Angeles Unified School District. So this is outside of Arizona, but they were at first really worried because the wording in H.R. 1 had initially been interpreted as "buses placed into service" and they weren't supposed to receive buses. They just got a notification that it was going to be before the first quarter of 2026, but they didn't know when they were coming.

So, they were really worried because they had already purchased these buses and were hoping to get the 30% of those costs covered by the Inflation Reduction Act-era tax credits. But then they thought that they couldn't anymore. The good thing is, on Aug. 15, there was sort of a rewording of that because I think the government realized there were a lot of districts in that same situation — where they had ordered the buses, but they hadn't come yet.

And that's something that Sue Gander at the World Resource Institute Electric School Bus Initiative was telling me — that there were a lot of school districts in that same situation that were stressed about when they would, they didn't know when they would get the buses. But luckily, the new Treasury Department guidance said, "OK, for schools in that situation, as long as you purchase the bus, you'll be OK."

For Tucson, though, in their school district, they had already gotten — I think — a 10-bus fleet. That was in Nov. 2024. So, that was through funding from the federal government, but a slightly different bucket of funding. It was the Environmental Protection Agency's Clean School Bus Program. But that, for most districts, only covered about two-thirds of the funding, and the remaining one-third was to be covered by this federal tax credit.

BRODIE: What are folks in the advocacy world supporting the adoption of more electric school buses saying about what kind of impact the loss of this tax credit might have?

GENTIN: Well, I think I said before this, but the loss of that tax credit could impact around $40,000 per vehicle. So, that means across the country there are more than half a million buses transporting 21 million kids to school. And there are all sorts of environmental impacts that come with these diesel- or fossil-fueled buses.

So, the hope was that the transition could continue, but now it's more of like, telling districts, "you have to get these buses as soon as possible; otherwise, you won't be able to receive tax credits for them and you won't be able to electrify your fleet." So, I think it will delay a lot of the electrification processes and the majority — this 90% of fossil fuel diesel school buses — will continue operating.

BRODIE: Does it seem as though advocates think this really is just a delay and not sort of the ending of this effort to electrify fleets?

GENTIN: It seems like districts still have hope and advocates still have hope that there could be some other funding sources that they look to to fill that gap. However, the Environmental Protection Agency's Clean School Bus Program, I believe, is expiring in two years. So that's, that's another setback. But for the portion that was covered by the clean energy tax credits, these federal tax credits, they are hoping to replace with either local sources of funding or state sources of funding.

But some states are more fortunate than others. For example, California has a lot of resources to fund electric school buses and electric vehicles, but some other states just don't have those resources.

EDITOR’S NOTE: Due to an editing error, this story’s headline has been updated to reflect that a tax credit is ending.