US Treasury: Consumer Leases Can Qualify For EV Tax Credits11
The U.S. Treasury Department announced new guidance today regarding EV tax credits, indicating that electric vehicles leased by consumers can qualify for upwards of $7,500 in commercial clean vehicle credits starting January 1st of the 2023 calendar year.
According to a recent report from Reuters, the decision qualifies some vehicles assembled outside of North America for the EV tax credits, supporting overseas automakers vying to boost consumer EV access. Back in August, the U.S. Inflation Reduction Act (IRA) ended $7,500 consumer EV tax credits for the purchase of vehicles assembled outside North America, resulting in a backlash from overseas automakers hoping to offer new EV models eligible for the credit in the U.S.
The commercial credit also does not include the same battery mineral and component restrictions included in the IRA, the latter of which includes a phasing out of materials and components sourced from China. Earlier this month, Treasury said it would delay guidance on sourcing requirements for new EV batteries until March. The IRA stipulates that beginning in 2023, 40 percent or more of critical minerals must be manufactured or assembled in North America, with that percentage rising 10 percent every following year. Additionally, 50 percent or more of the EV battery component value must be manufactured or assembled in North America, with that percentage also rising 10 percent every following year. These requirements are also satisfied if related materials are sourced from countries with an established free trade agreement with the U.S.
The new law passed in August also eliminates a 200,000-vehicle manufacturing cap for EV tax credit qualification, once again opening up the credits to GM. The Treasury is set to release a comprehensive list qualifying EVs this weekend.
Notably, the new Treasury guidance does not change the definition of North American assembly to make additional EVs eligible for purchase. However, the Treasury did say it was leaning on “long withstanding tax principles” with regard to qualifying EV tax credits for consumer leasing.
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With 2024 being taken at point of sale aka dealer, I wonder if the tax payer filing has to OWE the 7500 to benefit from the full 7500 or is it like the past if you just owed say 5000 to irs you only get 5000 of the 7500? Does anyone know or saw this in the latest bill requirements or not known yet? I would think if the dealer can take it off at point of sale in 2024 either they need to see ones tax bill for 2024 which makes no sense or indeed this round of the credit you get the 7500 regardless OR you get to write it off each year til its gone like one can do for solar.
Great question! Are you referring to lease or purchase? The 7500 appears to still not be a refundable tax credit.
Leasing may be work around, since the “owner” likely gets the full 7500 credit, i am still fuzzy on details.
But if you want an EV, it may be possible to lease and buy out at end and get the 7500 off, even if your annual fed taxes are less than 7500. I would think the 7500 may be factored into lease payment and residual value/buyout option?
I guess the govt figures poor people don’t buy EVs??
Either one but in general I am hoping this time around its not based on what you OWE the IRS whether or not its done at your filing time OR later thru the dealer because that means many will not get the full benefit of the 7500 IF they can afford to buyone on an income that does not generate an OWE 7500 at least to the IRS.
My understanding is that you elect to transfer the amount the vehicle would be eligible for to the dealership, and they give you a discount at time of purchase for that amount. For the dealership, it becomes essentially a refundable credit. They will submit paperwork to the IRS with the VIN, and sales data, including your information, MSRP, and how much of a discount they gave you.
When you file your taxes, you have to send in the correct form with essentially the matching information. If your Adjusted Gross Income exceeds the cap, you are going to owe the discount amount back to the IRS. But otherwise, it shouldn’t matter how much you owe in taxes.
*this is not tax advice and you should consult with an tax expert.
I am hoping exactly that. That is generally whether or not one files and claims or dealer does and later in filing that one does NOT have to owe $7500 to get the full benefit. This would allow many more to get the full benefit to buy EVs even if their income is lower and does not generate a a 7500+ obligation to counter the credit/writeoff. Yeah yeah its a handout if say one has just only 4k obligation but they give the the full 7500 but then again is not child care credits and such handouts! Even if it rolled over from year to year like solar would be good too. Fingers crossed it happens.
Manufacturers inflate their prices by approximately the amount of the incentive while they are eligible.
GM vehicles still not on the eligible list yet. What’s up with that? I’m picking up a Bolt on Jan 3. Hopefully I can get the full credit.
“This manufacturer has entered into a written agreement with us to become a “qualified manufacturer” but hasn’t yet submitted a list of specific makes and models that are eligible. Please check back here for updated information.”
List has been added now. Bolt is on there.
These scumbags have already figured out the loopholes. The administration told them way back that this would happen. No benefit to the consumer. I wonder where are money went. Pockets of the people in charge of a poorly run company. In lock step with the government.
More handouts, get an EV get a handout.
Leasing seems like a good option to get the credit without having the rules of income requirements etc. Anyone have experience with which car manufacturers have started to incorporate the 7500 rebate to consumers in their “lease” offerings?