As the push for electric vehicles (EVs) continues to gain momentum, more and more people are looking for ways to make the switch from gas-powered cars to environmentally-friendly electric ones. However, with the higher upfront costs of EVs, affordability remains a major barrier for many consumers. But there’s good news: a tax loophole is making EV leasing more affordable than ever.
Under current tax law, businesses can receive a federal tax credit of up to $7,500 for each EV they purchase. This credit is meant to encourage businesses to adopt electric vehicles and reduce their carbon footprint. However, this tax credit can only be used by businesses that owe federal taxes, which means that many smaller businesses or startups that are not yet profitable cannot take advantage of it.
To address this issue, some companies have started offering “pass-through leasing,” which allows individuals to take advantage of the tax credit when leasing an EV. Here’s how it works: the leasing company purchases the EV, takes the tax credit, and then leases the vehicle to the individual at a reduced rate. The individual then benefits from the lower lease rate and the tax credit, which is passed through to them in the form of reduced monthly payments.
This pass-through leasing model is a win-win for both the individual and the leasing company. The individual benefits from the lower lease rate and the tax credit, while the leasing company benefits from the increased demand for EVs. In fact, some companies have reported that the demand for their EV leasing programs has increased by as much as 300% since they started offering pass-through leasing.
The benefits of this tax loophole are not just limited to individual consumers. It’s also having a positive impact on the environment. As more people switch to electric vehicles, the demand for gas-powered cars decreases, which means fewer emissions and a cleaner environment.
But there’s a catch: the tax credit is set to phase out once an automaker sells 200,000 EVs. Currently, Tesla and General Motors have already reached this limit, which means that consumers leasing their vehicles are no longer eligible for the federal tax credit. However, other automakers such as Ford and Nissan still have some time before they reach this limit.
In addition, some states offer their own incentives for EVs, such as tax credits, rebates, or exemptions from sales tax. These incentives vary by state and are subject to change, so it’s important to research the incentives available in your area.
While EVs are still more expensive than their gas-powered counterparts, the availability of pass-through leasing and other incentives are making them more accessible and affordable than ever. As more people switch to electric vehicles, the hope is that the demand for them will continue to grow, leading to even more innovation and affordability in the industry.
