While many car buyers in the United States are excited about the $7,500 tax credit under the Inflation Reduction Act of 2022, their smiles frequently turn into frowns after visiting their local dealership.
The bad news causing the frown is that only 12 electric and plug-in hybrid vehicles currently qualify for $7,500 federal tax credits under the new and far stricter battery-sourcing rules that recently went into effect. Many EVs and most plug-in models are ineligible.
The list of eligible vehicles is short, to wit: Cadillac Lyriq, Chevrolet Blazer, Chevrolet Bolt, Chevrolet Bolt EUV, Chevrolet Equinox, Chevrolet Silverado (pickup truck), Chrysler Pacifica, Ford F-150 Lightning (pickup truck), Ford Mustang Mach-E, Lincoln Aviator Grand Touring, Tesla Model 3, Tesla Model Y, and the Volkswagen ID.4.
But there is a loophole of sorts, one that’s a mile wide and a kilometer long, namely that, because the new federal rules exempt leased vehicles from restrictions on where the car is manufactured, where its battery materials are sourced from, and the buyer’s income, the car buyer can lease instead.
All battery electric vehicles if leased because, under the IRA, they are considered commercial vehicles. Vehicles purchased by rental-car companies receive the same favorable treatment.
“Leasing is clearly a no-brainer for the individual buyer,” said Dr. Hal Abrahamson, the vehicle exchange manager at Huntington Lincoln on Long Island. “It fits our instant gratification society by applying the credit immediately to the cost of the vehicle, thereby lowering the monthly lease payment for the car buyer instead of making him to wait until next year’s taxes are filed.”
(Photo: Accura Media Group)