Leasing an electric vehicle (EV) or plug-in hybrid (PHEV) can be a smart way to take advantage of the federal tax credit. Here’s a breakdown of what you need to know:
1. What Is the Lease Tax Credit?
- Eligibility Loophole: The Inflation Reduction Act (IRA) of 2022 grants a $7,500 tax credit to qualifying EVs. While direct buyers face restrictions (income limits, manufacturing rules), leasing companies aren’t subject to these rules and can claim the credit themselves.
- Passing It On: Many leasing companies use this credit to offer discounts, such as lower vehicle prices or reduced interest rates ("money factors").
2. How to Ensure You Get the Credit
- Look for Advertised Discounts: Manufacturers often market tax-credit-related savings as lease bonuses or reductions in the lease price.
- Ask Specific Questions: Terms to watch for include "EV Lease Bonus," "45W Credit," or "Capitalized Cost Reduction."
- State Incentives: Check if your state or local area offers additional lease-specific incentives. For example, California requires a 30-month lease term for rebates.
3. Which Automakers Pass the Credit to Lessees?
Some automakers are transparent about incorporating the tax credit into their leases:
- Clear Terms: Audi, BMW, Genesis, and Volkswagen explicitly mention the tax credit in lease deals.
- Ambiguous Terms: Automakers like Ford and Nissan don’t always itemize the tax credit but may still apply it indirectly through pricing adjustments.
4. Should You Lease or Buy?
- Do the Math: Compare the total cost of leasing to the cost of buying, factoring in resale value and ownership.
- Leasing: Lower monthly payments but no equity in the car at lease end.
- Buying: Higher upfront costs but potential long-term savings if resale value holds.
- Examples:
- 2023 Chevy Bolt LT:
- Lease: $299/month for 36 months with $6,109 due, totaling $16,873.
- Buy: $31,842 over 3 years but could retain $18,000 in resale value, resulting in a net cost of $13,842—or $6,342 with the tax credit.
- 2024 Polestar 2:
- Lease: $399/month for 36 months with $5,399 due, totaling $19,763.
- Buy: Ineligible for purchase credit; leasing is more cost-effective.
5. Popular EVs and PHEVs With Lease Tax Credits
Here’s a list of vehicles where automakers may apply the tax credit to lease deals:
- Audi: $7,500 EV Lease Bonus on E-Tron and Q4 E-Tron models.
- BMW: Lease credit on i4, i7, and other models, with some discounts exceeding $7,500.
- Hyundai: $7,500 Lease Bonus on Ioniq 5/6 and Kona Electric.
- Toyota: Discounts range from $4,500 (Prius Prime) to $7,500 (bZ4X).
- Volkswagen: $7,500 EV Lease Bonus on ID.4.
6. Key Considerations When Leasing
- Transparency: Ensure that the lease deal explicitly factors in the credit.
- Residual Values: Check the car’s estimated value at lease end, as it influences monthly costs.
- Reliability Ratings: Choose models recommended for reliability and owner satisfaction.
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