The EV lease tax credit “loophole” significantly reduces leasing costs by allowing dealers to apply the $7,500 commercial vehicle credit to lease terms, even for EVs that don’t meet strict purchase eligibility criteria. Here’s how it works:
Impact on Lease Costs
- Lower monthly payments: Dealers often pass the credit to lessees through reduced lease prices, either by reducing the capitalized cost upfront or offering incentives like waived payments.
- Broader eligibility: Leased EVs bypass domestic sourcing rules and buyer income caps, enabling savings on models that wouldn’t qualify for a purchase tax credit.
- Dealer discretion: While lessees don’t directly claim the credit, competitive dealers frequently use it to lower effective costs, making leases more attractive than purchases for many EV models.
Current Market Effect
Leasing now accounts for over 50% of new EV transactions, driven largely by this incentive. Automakers use the credit to clear inventory, further lowering costs through additional manufacturer incentives.
Caveats
Savings depend on dealers passing the credit to customers, which isn’t guaranteed. The loophole could close after 2025, adding urgency to current deals.
Original article by NenPower, If reposted, please credit the source: https://nenpower.com/blog/how-does-the-tax-credit-loophole-for-leased-evs-impact-the-overall-cost-of-leasing/
