Use This Loophole to Claim a $7,500 Tax Credit on Almost Any Electric Vehicle

Earlier this year, we told you about the Chevy Bolt tax credit , which allowed you to buy a car for a net price of $19,995 after the tax credit thanks to the Inflation Reduction Act of 2022 (IRA). While you can still get that deal today (be aware that the Bolt line has been discontinued ), many electric vehicles (EVs) that fit this loophole no longer fit as of April after IRA changes tightened their recommendations in regarding which electric vehicles are eligible for use. loan for a clean car. However, you still have a chance to take advantage of the clean vehicle tax credit if you are willing to rent it rather than buy it.

Currently, there are only about a dozen electric vehicles that qualify for the tax credit if you plan to buy, but just about any make or model is eligible for the full $7,500 if you rent it instead. You might be wondering who benefits from the tax credit if you rent – and that’s a fair question. It will end up being a dealership, but many of them are already passing those savings directly on to you in the form of better rental terms.

How does the clean vehicle tax credit loophole work?

The loophole is the result of language in the IRA’s guidance that classifies rental cars as “commercial vehicles” that are not subject to the same strict regulations as electric vehicles you buy outright. As a result, many dealerships offer some sort of “cash” reward for qualifying electric vehicles, such as a $7,500 bonus for 2023 EV6 rentals and a $7,500 Hyundai reward for IONIQ 5 SE rentals . (Each deal is subject to certain terms and conditions, so be sure to explore your options if you’re hoping to avail credit.)

Keep in mind that although dealerships receive these rental tax credits, they are not required to pass them on to you. However, this does not mean that you cannot benefit.

How to Claim a $7,500 Clean Car Tax Credit

The best weapon to have in your arsenal every time you go to a car dealership is knowledge. And if you walk in knowing the dealership will get a $7,500 tax credit if you rent a car from them, you should definitely use that as a bargaining chip over down payments and lease terms.

You may not even have to ask. Electrek has a rundown of what automakers have already announced they are willing to “pass on rental incentives to customers ,” and most of them have already responded in the affirmative – with the notable exception of Tesla.

Be aware that this loophole may not last forever as the IRS has said it is still working on the tax credit application form , and this could further tighten tax entitlements, potentially closing the loophole.

Benefits of leasing with an IRA tax credit

While few electric vehicles qualify for the tax credit, if you buy them right away, you should see the leasing savings on your monthly bill right away—no need to wait to ask for the money back on your tax return next year.

There are also no salary or price caps for customers who want to rent an electric car, while a purchase option that sets those caps.

Another great leasing opportunity is that you may be able to buy a car at a reduced price at the end of the lease. In this case, you will actually lock in this electric car at a lower price, taking advantage of better rental terms right now.

A previous copy of this article said that the Chevy Bolt was no longer eligible for the full $7,500 tax credit, but it still qualifies. The copy above was updated at 10:50 am May 17th to reflect this.