You cannot directly claim the federal EV tax credit if you lease an electric vehicle because the credit belongs to the lessor (the leasing company or dealership), not the lessee. However, leased EVs are eligible for the federal tax credit, which the leasing company can claim as a commercial clean vehicle credit. Many dealerships or leasing companies may pass the value of this credit on to you indirectly via rebates or lowered lease payments, so you may still benefit financially from the credit even though you do not claim it yourself on your tax return.
Key points to understand:
- Who claims the credit? The leasing company claims the federal EV tax credit on leased vehicles, since they hold ownership of the vehicle during the lease term.
- Benefit to lessees: Dealers often pass this credit on as a lower lease price or an upfront rebate, but it is not guaranteed—be sure to ask the dealer if they apply this credit savings to your lease.
- Credit amount: The full tax credit can be up to $7,500 for new EV leases, typically without the stricter vehicle and buyer requirements that apply to purchasing customers, such as battery sourcing and income caps.
- Income limits: Since the lessor claims the credit, the lessee’s personal income limits do not apply as they do for purchasers claiming the credit.
- Lease term requirement (Colorado example): Some states, like Colorado, require new EV lease agreements to have an initial term of at least two years to qualify for the state and federal credits.
- Used EV leases: Used EVs also have federal credit options, but these depend on vehicle price and other criteria, with a maximum credit around $4,000.
In summary, while you cannot personally claim the federal EV tax credit on a leased electric vehicle, the leasing company claims it instead and may pass the savings to you through your lease deal. Always confirm with your dealer how the credit is handled in your lease agreement. This “EV lease loophole” currently allows more flexibility and potential savings for lease customers compared to buyers, but the tax credit rules and availability can evolve after 2025.
Original article by NenPower, If reposted, please credit the source: https://nenpower.com/blog/can-i-claim-the-federal-ev-tax-credit-if-i-lease-an-electric-vehicle/
