To be eligible for a tax credit on a leased Electric Vehicle (EV), the following requirements must be met:
- Vehicle Requirements:
- The vehicle must be new and not used.
- It must be propelled by an electric motor with at least a 7 kWh battery and be capable of charging from an external electrical source.
- The vehicle must be leased by a qualified manufacturer.
- Tax Credit Mechanism:
- The tax credit, up to $7,500, is given to the lessor, which is usually an affiliate of the manufacturer. This is facilitated through the Commercial Clean Vehicle Tax Credit (Internal Revenue Code 45W).
- The lessor can pass this credit on to the lessee in the form of reduced lease payments or as a down payment rebate, but they are not required to do so.
- Eligibility Considerations:
- There are no income limits for the lessee, as the tax credit is claimed by the dealer or lessor. However, it’s crucial to verify with the dealer or manufacturer whether they will pass on the tax credit benefits to the lessee.
These requirements and mechanisms apply under the Inflation Reduction Act, which includes provisions for clean vehicle tax incentives.
Original article by NenPower, If reposted, please credit the source: https://nenpower.com/blog/what-are-the-eligibility-requirements-for-the-tax-credit-on-leased-evs/
