The loss of the federal EV tax credits may have been a huge blow to prospective buyers, but California wants to fill that gap for its residents. Governor Gavin Newsom’s proposed budget for 2026-2027, which was released on Friday, includes a “light-duty zero-emission vehicle (ZEV) incentive program” that details a one-time infusion of $200 million.

According to the budget summary, this incentive program is “a critical part of the Administration’s strategy to keep ZEVs affordable and accessible for all.” The proposed budget still has to make it through the state’s legislature later this year, but if passed, the new incentive would help continue the momentum of EV adoption across California. In the third quarter of 2025, the state saw almost 30 percent of auto sales being EVs, according to the California Energy Commission.

There are no details in the budget summary outlining how exactly the $200 million would break down on a per-vehicle basis, but USA Today reported that the rebate would be an “on the hood” instant discount for EVs. Previously, buyers would get up to $7,500 back in federal tax rebates on new EV purchases and up to $4,000 on used EVs. For California’s proposed incentives, the chairwoman of the California Air Resources Board, Lauren Sanchez, told USA Today that the state is still trying to figure out if it will offer tax credits for those who buy used EVs.