P&A Providers & Administrators
MenuMENU
SearchSEARCH

Leasing Circumvents Tax Credit Limits

Law treats leased vehicles as commercial, giving consumers an end around.

May 16, 2023
Leasing Circumvents Tax Credit Limits

Under recently narrowed qualifications, just 16 domestically made models qualify for the tax credits for purchases.

IMAGE: Pexels/Cindy Shebley

1 min to read


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.

Ad Loading...

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.

LEARN MORE: Credit-Qualifying EV Models Winnowed

Originally posted on Auto Dealer Today

More Industry

Orange electric vehicle charging station.
Industry•by Lauren Lawrence•October 20, 2026

Charger Network Growth Slows

Despite a projected increase in public EV chargers in 2026, charging infrastructure remains a top concern for consumers as the gap between the most and least EV-friendly places remains substantial.

Read More →
Fan of $100 bills atop a white envelope
Industry•by Hannah Mitchell•October 13, 2026

Lenders, Consumers Take on More Auto Loan Risk

September records loosened credit access the most in over a decade as buyers took advantage of the conditions to afford trading, though loan applications fell.

Read More →
Red type R Honda civic parked on road.
Industry•by Lauren Lawrence•October 13, 2026

Next-Gen Hybrids in Sight

Dealerships can expect to see revamped hybrids from Honda next year as the company rolls out a new system and model lineup.

Read More →
Ad Loading...
Dodge ram emblem on orange vehicle exterior
Industry•by Hannah Mitchell•October 6, 2026

Gem State Stores Change Hands

A larger auto group founded in the industry’s early years sold two franchises to a neighbor group that's on a growth spurt.

Read More →
Graphic of model car driving on fake road.
Industry•by Lauren Lawrence•October 6, 2026

Charging In Motion

Honda has been researching wireless in-motion charging for electric vehicles since 2025, and new technology developments have put it a step closer to a final product.

Read More →
front grill of a Ford truck with blue Ford emblem
Industry•by Lauren Lawrence•September 30, 2026

Twin Cities Stores Sell

Minnesota-based Walser Automotive Group made what it called the most significant acquisition in its history with a three-rooftop deal in Minneapolis.

Read More →
Ad Loading...
Diesel engine on a production line in a factory
Industry•by Hannah Mitchell•September 29, 2026

U.S. Auto Sales Still Below Prepandemic Levels

Mobility Global industry observers don’t expect the market to return to the higher volumes that became routine before Covid but to stay well below its potential.

Read More →
Front of red tesla car.
Industry•by Lauren Lawrence•September 22, 2026

The Powertrain Shift

Electric-vehicle owners are backpedaling, according to new data, with product availability driving many to shift back to gas-powered engines.

Read More →
White BMW SUV driving on road.
Industry•by Hannah Mitchell•September 15, 2026

Achromatic Autos

The shades that dominate the U.S. car market don’t call attention to themselves, though grayscale may have plateaued after a 30-year upswing, research shows.

Read More →
Ad Loading...
Line of eclipse SUVs in parking lot.
Industry•by Lauren Lawrence•September 15, 2026

Used-Vehicle Affordability Worsens

Listing prices in August defied seasonal trends, rising above $27,000 for the second time this year.

Read More →