Requirements for Leased EVs to Qualify for Tax Credits
Leased electric vehicles qualify for a federal tax credit under the Commercial Clean Vehicle Tax Credit, also known as Internal Revenue Code 45W. However, this credit goes to the leasing company, not the consumer. Here are the key points regarding leased EVs and tax credits:
- Eligibility for the Tax Credit:
- The tax credit for leased EVs can be up to $7,500, similar to purchases, but it is claimed by the leasing company (usually an affiliate of the manufacturer) rather than the lessee.
- This classification allows leased EVs to bypass some of the stricter sourcing and pricing requirements applicable to purchases.
- Conditions for Leased EVs:
- Unlike purchased EVs, leased vehicles do not require the battery components or minerals to meet specific sourcing requirements because they are considered commercial vehicles.
- The leasing company must purchase the vehicle as an investment (not for transportation) and then lease it to a consumer, making it eligible for the commercial tax credit.
- Passing the Credit to Consumers:
- The leasing company may pass some or all of the tax credit savings to the consumer in the form of a lower down payment or reduced lease payments.
- Not all dealerships may pass on the credit, so it’s crucial for consumers to negotiate and verify if the savings will be applied.
- Income Limits:
- Since the leasing company receives the tax credit, income limits applicable to individual purchasers do not apply to those leasing EVs.
Original article by NenPower, If reposted, please credit the source: https://nenpower.com/blog/are-there-any-specific-requirements-for-leased-evs-to-qualify-for-tax-credits/
