{"id":19061,"date":"2023-06-06T17:39:45","date_gmt":"2023-06-06T21:39:45","guid":{"rendered":"https:\/\/ifintechworld.com\/news\/heres-how-to-get-the-7500-electric-car-credit-on-a-vehicle-thats-excluded\/"},"modified":"2023-06-06T17:39:46","modified_gmt":"2023-06-06T21:39:46","slug":"heres-how-to-get-the-7500-electric-car-credit-on-a-vehicle-thats-excluded","status":"publish","type":"post","link":"https:\/\/ifintechworld.com\/?p=19061","title":{"rendered":"Here\u2019s How To Get The $7,500 Electric Car Credit On A Vehicle That\u2019s Excluded"},"content":{"rendered":"
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As part of the Inflation Reduction Act signed into law last year, Congress extended the one-time $7,500 \u201cclean car\u201d federal tax credit to help spur sales of electric vehicles, but it only did so selectively.<\/p>\n

As it stands the credit only applies to EVs that are assembled in the U.S., and further depends upon its battery component and\/or critical minerals sourcing, and a vehicle’s sticker price (maximum $80,000 for vans, SUVs and pickups, $55,000 for cars).<\/p>\n

That\u2019s restricted the tax credit\u2019s availability to a relative handful of domestically produced models, including those from Cadillac, Chevrolet, Ford, Rivian and Tesla, along with the Nissan Leaf and Volkswagen ID4 (you can find the current list of qualifying EVs and plug-in hybrids here). In addition, further limits are placed on a purchaser\u2019s modified adjusted gross income ($300,000 per household, $150,000 for an individual, or $225,000 for a head of household).<\/p>\n

But some automakers whose EVs would not otherwise qualify for the program, including BMW, Genesis, Hyundai, Kia and a few others have found a way to leverage a loophole in the legislation that allows their customers to take advantage of the $7,500 tax credit anyway, and they\u2019re doing it via their leasing programs.<\/p>\n

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Part of the bill that selectively restored the tax credits extended them without the aforementioned exceptions to commercial fleets in a move to encourage them to switch from internal combustion to electric powered vehicles.<\/p>\n

As with the previous program, a commercial leasing entity (in this case an automaker\u2019s financing division) as the de facto \u201cowner\u201d is allowed to claim the tax credit via the Clean Vehicle Lease Tax Credit Pass-Through program and apply it directly to an EV\u2019s capitalized cost reduction to reduce a lessee\u2019s monthly payments. The company can also pocket the incentive if it chooses.<\/p>\n

Not only does leasing a new EV expand the $7,500 credit\u2019s availability, it essentially puts it into a lessee\u2019s pocket up front without having to wait to claim it in the following year when filing his or her income tax return. Since a buyer\u2019s tax credit is used to reduce his or her yearly tax liability, the leasing loophole assures a lessee who may not owe at least that amount to Uncle Sam will receive the entire credit. It also apparently circumvents the MSRP and income restrictions.<\/p>\n

This workaround could well help boost EV leasing which, along with the practice in general, has been on the skids in recent months. Leasing accounted for 26.5% of all new EV transactions back in 2021, and was seen as a way to ensure that one would not be stuck with a technologically obsolete ride down the road. Last year only 12.6% were leased, according to Experian.<\/p>\n

We scoured EV makers\u2019 current leasing deals and found the following models passing along the full $7,500 credit as capitalized cost reductions to lessees:<\/p>\n