Save Money Buying an Electric Vehicle Even If It Does Not Qualify for a Tax Credit


For U.S. car buyers, the federal government offers a great opportunity to save $7,500 on their purchase of an electric vehicle (EV). With the “Inflation Reduction Act,” they can get this subsidy on qualifying vehicles as long as they meet certain criteria such as the make/model, battery/material requirements, and price caps. There is a cap of $80,000 for trucks and SUVs, and $55,000 for sedans and crossover vehicles.

However, it’s not easy to figure out if a car qualifies for the EV purchase tax credit, given the changing policies of the IRS. To make matters even more complex, the IRS reversed its decision on the Ford Mustang and Tesla regarding the $55,000 limit, now allowing them to fall under the $80,000 limit for SUVs, trucks, and vans. At the start of 2023, the IRS appeared to ignore the battery and battery-intake requirements, instead only looking for EVs assembled in North America and for the price caps to be met. This was recently changed to include the battery/material requirements and published in April.

Thankfully, though, there is a loophole related to leasing that makes the EV purchase tax credit accessible even for vehicles that don’t qualify. According to a reliable accounting expert, leasing an EV under Section 45w of the federal law is eligible for a credit up to $7,500, regardless of battery and material requirements. Hyundai and Polestar Automotive, two companies that sell EVs made outside North America, offer customers discounts on their leases.

For instance, Polestar offers a $7,500 Clean Vehicle Lease Rebate until May 1st. Hyundai, on the other hand, had a 8% decrease in U.S. sales from the first quarter of 2023 compared to the same from the previous year. It’s likely that many car buyers just weren’t aware of the leasing loophole.

With this information, U.S. EV shoppers can save money on their purchase of an electric car. Be sure to ask the respective companies for the full amount of the tax credit, as some might withhold it for themselves. Ultimately, car buyers should keep in mind the options available to them and make sure to take advantage of any savings they can get.