Earlier this year, we told you about a tax credit loophole for the Chevy Bolt that allowed you to buy the vehicle a net price of $19,995 after a tax credit, thanks to the Inflation Reduction Act of 2022 (IRA). That loophole has been closed since April after revisions to the IRA tightened its guidance on which electric vehicles (EVs) qualify for the “clean vehicle credit.” However, you still have a chance to benefit from the clean vehicle tax credit, as long as you’re willing to lease instead of buy.
As it stands, there are only about a dozen EVs eligible for the tax credit if you plan to buy—but almost any make or model is eligible for the full $7,500 if you lease it instead. You might be wondering who benefits from a tax credit if you lease—and that’s a fair question. It would ultimately be the dealership, but many of them are already passing down those savings directly to you in the form of better lease terms.
How does the clean vehicle tax credit loophole work?
The loophole is the result of language in the IRA’s guidance that categorizes leased vehicles as “commercial vehicles,” which are not subject to the same strict guidelines as EVs you buy directly. As a result, many dealerships are offering a sort of “cash back” reward for qualifying EVs, like Kia’s $7,500 bonus on 2023 EV6 leases and Hyundai’s $7,500 lease reward on the IONIQ 5 SE. (Each deal is subject to specific terms, so make sure to research your options if you hope to take advantage of the credit.)
Keep in mind that while dealerships are getting these tax credits for leases, they are under no obligation to pass them down to you. However, that doesn’t mean you can’t benefit.
How to get the $7,500 clean vehicle tax credit
The best weapon to have in your arsenal any time you walk into a dealership is knowledge. And if you walk in knowing the dealership will be benefitting from a $7,500 tax credit if you lease a car from them, you should absolutely use that as a bargaining chip as you haggle over down payments and lease terms.
You may not even have to ask. Electrek has a rundown of which automakers have already announced their willingness to “pass lease incentives on to customers, and most have already indicated in the affirmative—with the notable exception of Tesla.
Keep in mind this loophole might not last forever, as the IRS said it’s still working on the form to claim the tax credit, and it could tighten the tax eligibility further, potentially closing the loophole.
The benefits of leasing with the IRA tax credit
While few EVs qualify for the tax credit if you buy them outright, you should realize the savings from leasing right away on your monthly bill—no need to wait to ask for the money back on your tax return next year.
There are also no salary or price limitations for customers who want to lease an EV, while the purchase option which does set those restrictions.
Another great opportunity with leasing is that you may have the option to buy the vehicle at a discounted price at the end of the lease. In that circumstance, you will effectively lock in that EV at a lower price by taking advantage of the better terms on the lease right now.
