Tax credits can impact the overall cost of leasing an electric vehicle (EV), though the direct benefit goes to the lessor. Here’s how it works:
Impact on Leasing Costs
- Tax Credit Allocation: The federal tax credit of up to $7,500 for EVs is allocated to the lessor, not the lessee. This is because leased EVs are considered “commercial vehicles” under IRS regulations, allowing the leasing company to claim the full credit.
- Passing Savings to Lessees: While the tax credit itself does not reduce the lessee’s tax liability, the leasing company may choose to pass the savings on to the lessee. This can be done through reduced lease payments or a rebate, effectively lowering the overall cost of the lease.
- Negotiation: Potential lessees can try to negotiate the benefits of the tax credit into their lease agreement. Mentioning the tax credit during negotiations may persuade the lessor to offer more favorable terms.
Benefits and Limitations
- Broader Eligibility: Leased EVs are not subject to the same strict sourcing requirements as purchased EVs, making more models eligible for the tax credit. This can result in a wider selection of vehicles for lease.
- No Income Limits for Lessees: Since the tax credit is claimed by the lessor, lessees do not face income limits to benefit from the credit indirectly through lower lease costs.
Overall, while lessees do not directly receive the tax credit, they can still benefit from lower costs if the lessor decides to share the savings. This can make leasing an EV more financially appealing compared to purchasing, especially when combined with other potential incentives in some states.
Original article by NenPower, If reposted, please credit the source: https://nenpower.com/blog/how-do-tax-credits-impact-the-overall-cost-of-leasing-an-ev/
