Set toExpire Lease Tax Credit for Electric Vehicles Soon
The federal EV lease tax credit, a significant incentive for electric vehicle (EV) lessees, is currently available for qualifying electric vehicles. This tax credit, worth up to $7,500, is claimed by the leasing company (lessor) and is often passed on to the lessee in the form of reduced lease payments or rebates [1][3].
This tax credit is part of the current federal clean vehicle credit program, which also offers up to $7,500 for new EV purchases and up to $4,000 for eligible used EV purchases, subject to income and vehicle price limits [2][3][5].
However, it's important to note that this lease tax credit loophole will be eliminated after September 30, 2025. Starting from October 1, 2025, dealers and lessors will no longer be able to claim the tax credit on leased EVs, effectively ending this advantage for leased vehicles [1][2][4][5].
Key points:
- The lease tax credit belongs only to the leasing company, who may pass savings as lower monthly lease payments but is not obligated to do so [1][3].
- Approaching the cutoff date of September 30, 2025, consumers must act quickly to benefit from leasing credits [2][3].
- After that date, the federal tax credit program for EVs will end entirely, including for both purchases and leases under current legislation signed into law in 2025 [1][2][4][5].
The Inflation Reduction Act (IRA), signed into law in August 2022, contains billions of dollars in clean energy tax incentives, including an up to $7,500 EV tax credit for eligible buyers and qualifying new and used "clean vehicles." However, this benefit will be short-lived for lessees, as the federal EV lease tax credit will no longer exist after the program's sunset on September 30, 2025 [6].
If you're considering leasing an electric vehicle, it's crucial to understand the current benefits and act quickly. Registered dealers should still be able to pass on the federal tax break for leases after the fall deadline, but the up to $7,500 federal incentive will go away, which could push lease prices higher if automakers don't step in with new offers [7].
It's also worth noting that leasing an electric vehicle does not have income limits for the EV tax credit, unlike purchasing an electric vehicle. Additionally, state electric vehicle tax incentives can provide additional discounts when combined with federal and EV tax incentives [8].
Some manufacturers offer "lease cash," "lease credit," or "EV lease bonus" which are essentially references to the EV tax credit. High car prices make EV leases an attractive option for some buyers, and the federal EV lease tax credit can reduce the cost of an EV lease [9].
The number of people leasing electric vehicles has grown significantly in recent years, and it's expected that this trend will continue as more affordable electric vehicle options become available [10]. However, after September 30, 2025, the federal EV lease tax credit will no longer exist, so potential lessees should act quickly to take advantage of this significant incentive.
[1] Federal EV Lease Tax Credit: What Lessees Need to Know
[2] Federal EV Tax Credit: What You Need to Know
[3] Federal EV Tax Credit Explained: How it Works for Leases
[4] Federal EV Tax Credit: What Happens After September 30, 2025?
[5] Federal EV Tax Credit: What You Need to Know About the Phaseout
[6] Inflation Reduction Act: What's in it for electric vehicles?
[7] Federal EV Tax Credit for Leases: What to Expect After September 30, 2025
[8] State EV Tax Incentives: What You Need to Know
[9] EV Tax Credits: What They Are and How They Work
[10] Electric Vehicle Leasing: A Growing Trend
- Technology advancements in electric vehicles (EVs) have made them more affordable, and the federal EV lease tax credit, worth up to $7,500, has contributed significantly to reducing lease prices.
- As the federal EV lease tax credit will be eliminated after September 30, 2025, prospective lessees must consider education and self-development opportunities to maximize their savings, such as understanding state electric vehicle tax incentives for additional discounts.
