Leasing Circumvents Tax Credit Limits
Law treats leased vehicles as commercial, giving consumers an end around.

Under recently narrowed qualifications, just 16 domestically made models qualify for the tax credits for purchases.
IMAGE: Pexels/Cindy Shebley
People with their eyes on electric-vehicle models that don’t qualify for a federal EV tax credit are abuzz about word that they can lease those vehicles and still get the cost break.
The credits, authorized under the Inflation Reduction Act passed last year, can save EV buyers up to $7,500, depending on the model they choose. But they’re restricted to vehicles that undergo final assembly in North America, don’t exceed buyer income and vehicle price caps, and whose battery materials are largely sourced in the U.S. or in a free-trade partner of the U.S.
Under recently narrowed qualifications, just 16 domestically made models qualify for the tax credits for purchases.
But it turns out that leasing a vehicle allows an end around the credit restrictions. The IRA defines leased vehicles as commercial for the purposes of applying the credits, and they’re therefore exempt from the limits. Auto dealers can then pass on the credit savings to leasing consumers via lower lease rates.
In fact, consumers who go the leasing route can lease any model and get the tax credit savings.
The IRA included the lease exemption to encourage rental car providers, municipalities and other fleet owners to go electric, the New York Times reported.
Originally posted on Auto Dealer Today
More Showroom

California Hybrids Reach State Record
The Golden State still leads the country in electric-vehicle registrations, but much like the rest of the U.S. its hybrid market share is up while full electrics stabilize after a dramatic first-quarter dip.
Read More →
My Mercedes in the U.S.
The German brand debuted its studio dealership concept for the first time in the states in Los Angeles, tapping Americans’ penchant for creative distinctions.
Read More →
Used Sales Hit Summer Drag
The vacation season, combined with high prices, has dented deliveries and added to inventories, though supply is still slim enough to keep listings elevated.
Read More →
California Launches EV Rebate Program
Participating automakers are matching the state's $13.5 million investment in new electric-vehicle rebates scheduled to take effect later this summer.
Read More →
OEM Poll Sees Industry Evolution
Kerrigan Advisors’ survey of automakers finds that tariffs, technology, network tightening and other factors are poised to reshape auto retail.
Read More →
The Trade-In Paradox
Retailing older cars with confidence in today’s market is a matter of establishing and following a clear process that can turn greater profit for auto dealers as they aim to meet used-unit hunger.
Read More →
Focus on Vehicle Cabins
The market for interior materials will grow in coming years as automakers look to meet consumer demand while staying competitive with changeups to sourcing and included features.
Read More →
State Follows Federal Warning on Auto Ads
The Massachusetts attorney general cautioned the state’s automotive dealers to be upfront with the consuming public about their vehicle prices or risk punishment.
Read More →
European EV Market Hits Record
Seven out of the top 10 electric vehicles sold so far in 2026 in Europe are by European brands, and automakers are seeing the power train fill up their order books.
Read More →
Used EVs Outpace New
While North American electric-vehicle sales remain down year-over-year, May sales saw a 3% increase from April’s numbers as used EVs led the market.
Read More →