Leasing Circumvents Tax Credit Limits
Law treats leased vehicles as commercial, giving consumers an end around.

Under recently narrowed qualifications, just 16 domestically made models qualify for the tax credits for purchases.
IMAGE: Pexels/Cindy Shebley
People with their eyes on electric-vehicle models that don’t qualify for a federal EV tax credit are abuzz about word that they can lease those vehicles and still get the cost break.
The credits, authorized under the Inflation Reduction Act passed last year, can save EV buyers up to $7,500, depending on the model they choose. But they’re restricted to vehicles that undergo final assembly in North America, don’t exceed buyer income and vehicle price caps, and whose battery materials are largely sourced in the U.S. or in a free-trade partner of the U.S.
Under recently narrowed qualifications, just 16 domestically made models qualify for the tax credits for purchases.
But it turns out that leasing a vehicle allows an end around the credit restrictions. The IRA defines leased vehicles as commercial for the purposes of applying the credits, and they’re therefore exempt from the limits. Auto dealers can then pass on the credit savings to leasing consumers via lower lease rates.
In fact, consumers who go the leasing route can lease any model and get the tax credit savings.
The IRA included the lease exemption to encourage rental car providers, municipalities and other fleet owners to go electric, the New York Times reported.
Originally posted on Auto Dealer Today
More Industry

World EV Adoption Set to Grow
A new report says the segment, despite recent setbacks in some regions, is poised for acceleration as many countries look to reduce pollution.
Read More →
Black Book: Weekly Market Update
Wholesale automotive auction business stayed steady last week as bidders encountered lower prices, analysts observed.
Read More →
Pricing Transparency Drives Purchase Consideration
An annual study by JD Power found that clear pricing matters to consumers on automaker websites, so much so that it increases their purchase consideration.
Read More →
Black Book: Weekly Market Update
Used-vehicle market depreciation was the prevailing story in the wholesale market last week.
Read More →
Smaller Is Looking Better
A growing number of Americans in the market for a new vehicle are opting for more affordable options, not waiting for market stability to bite the bullet.
Read More →
U.S. EV Market Slowly Stabilizes
U.S. electric-vehicle interest is slowly stabilizing since a major dip in sales after last year's end of the federal EV tax credit, and hybrids remain the leading electrified power train.
Read More →
Global EV Market Entering New Phase
Automakers are making investments to lower battery costs and optimize production to meet changing consumer needs.
Read More →
Black Book Weekly Market Update
The holiday weekend, not surprisingly, put a drag on wholesale automotive activity last week, analysts observed.
Read More →
Auto Affordability in Context
Cox Automotive points out the complex circumstances that have led to eye-popping vehicle prices.
Read More →
Black Book: Weekly Market Update
Automotive auction inventory increased last week, giving choosy bidders even more leeway.
Read More →