Eligibility requirements for EV tax credits in leases are generally focused on the vehicle specifications rather than the lease itself. However, the tax credit typically applies to the lessee only if the lessor (the owner of the vehicle) passes the credit on to them, which can be complex. Here are the key requirements for EV tax credits:
General Eligibility Criteria
- Vehicle Type: The vehicle must be an electric vehicle (EV) or fuel cell electric vehicle (FCEV) to qualify for the tax credit.
- Battery Capacity: The battery must have a minimum capacity of 7 kilowatt-hours (kWh).
- Price Limits: For new vehicles, there are no price limits specifically tied to leasing, but for new vehicles purchased, certain price limits may apply. However, these are primarily relevant for purchases rather than leases.
Battery and Sourcing Requirements
To qualify for the full $7,500 credit, the vehicle must meet both battery component and critical minerals requirements:
- Battery Components:
- 2023: 50% of battery components must be manufactured or assembled in North America.
- 2024-2025: 60%.
- 2026: 70%.
- 2027: 80%.
- 2028: 90%.
- 2029 and later: 100%.
- Critical Minerals:
- 2023: 40% of the value of critical minerals must be extracted, processed, or recycled in North America.
- 2024: 50%.
- 2025: 60%.
- 2026: 70%.
- 2027 and later: 80%.
Income and Transfer Limitations
- Income Limits: For new vehicle purchases, there are income limits:
- Joint filers: $300,000
- Head of household: $225,000
- All other filers: $150,000
These apply primarily to purchases.
- Transfer Limitations: No credit is available if the vehicle has been transferred to another buyer previously after August 16, 2022.
Lease Specifics
In practice, leasers (lessors) typically claim the tax credit, as they own the vehicle. However, the credit can be passed on to lessees in the form of lower monthly lease payments, although this is not always the case and depends on the leasing agreement.
For used vehicles, there is a federal tax credit of up to $4,000, but this generally applies to purchases rather than leases.
In summary, EV tax credits are more applicable to purchases than leases. However, leasing agreements might reflect the cost savings from tax credits through lower payments, depending on how the lessor structures the lease contract.
Original article by NenPower, If reposted, please credit the source: https://nenpower.com/blog/what-are-the-eligibility-requirements-for-ev-tax-credits-in-leases/
