Under the current EV leasing tax credit framework, dealerships and leasing companies typically pass on federal tax credit savings to lessees through negotiated financial incentives, since the credit legally belongs to the lessor (dealership or leasing company). Here’s how this works:
- Reduced lease payments
The most common method involves lowering monthly payments by applying the $7,500 credit as a capitalized cost reduction. This effectively reduces the total amount being financed through the lease agreement. - Upfront rebates/discounts
Dealers may offer one-time credits at signing, either as:- Cash rebates applied to the down payment
- Reduced “due at signing” amounts
- Waived acquisition fees
- Improved lease terms
Some lessors use the credit to enhance residual value calculations or money factor (interest rate) reductions, though this method is less transparent to consumers.
Key considerations:
• Not guaranteed – Dealers aren’t required to pass through savings, and practices vary significantly between companies.
• No income limits – Unlike purchases, leased EVs bypass buyer income restrictions ($150k-$300k limits don’t apply).
• Broader eligibility – Leased vehicles avoid strict battery/material sourcing rules required for purchase credits, allowing more models to qualify.
The Inflation Reduction Act’s commercial vehicle classification enables this structure, though the “pass-through” mechanism remains entirely at the dealer’s discretion.
Original article by NenPower, If reposted, please credit the source: https://nenpower.com/blog/how-do-dealerships-typically-pass-on-the-tax-credit-savings-to-lessees/
