When it comes to purchasing an electric vehicle (EV) in the United States, there is a $7,500 federal tax credit available for qualifying buyers. This tax credit, known as the “new clean vehicle” tax credit, has certain requirements that must be met in order for consumers to claim it. For example, the EV must be assembled in North America, and there are limits on the sticker price of the vehicle. Additionally, buyers’ annual income must fall below certain thresholds to qualify for the full tax credit.
While the tax credit is typically associated with buyers of new EVs, there is a lesser-known loophole that allows lessees to also benefit from the $7,500 tax credit. This mechanism, known as the “qualified commercial clean vehicles” tax credit, provides an opportunity for lessees to receive the tax credit without the same requirements that buyers face. This has led to an increase in leasing uptake for EVs, with more consumers opting to lease rather than buy.
Leasing an EV offers certain advantages over buying, especially when it comes to accessing the tax credit. Leases often come with lower monthly payments, making it an attractive option for consumers looking to save money. Leasing also allows consumers to always have a new vehicle, providing an opportunity to test out EVs without committing to a long-term purchase. Additionally, leasing can be a more flexible option for consumers waiting for the next generation of EVs to hit the market.
While the leasing loophole provides an opportunity for consumers to access the tax credit, there are still complexities involved in the process. Dealers may not always pass on the tax credit savings to lessees, and it can be difficult for consumers to understand how the credit is factored into their lease agreement. Experts recommend asking upfront about the tax credit and ensuring that it is clearly outlined in the lease documents. If the process is unclear or confusing, consumers should consider working with a different dealer to ensure they receive the full benefits of the tax credit.
In the debate between buying and leasing an EV, the tax credit plays a significant role in influencing consumers’ decisions. While the tax credit is traditionally associated with buyers, the leasing loophole provides an alternative option for accessing the credit. Ultimately, consumers should carefully weigh the benefits of leasing versus buying, taking into account potential savings, interest costs, and overall financial considerations. By understanding the tax credit landscape and navigating the process effectively, consumers can make informed decisions when it comes to acquiring an electric vehicle.