This EV loophole passes along a $7,500 tax credit without restrictions—here's what to know

A popular workaround may be the easiest way to save $7,500 on an electric vehicle.

By leasing instead of buying, many drivers have been able to claim the full $7,500 clean vehicle tax credit without meeting the strict income and manufacturing requirements that apply to most purchases.

Normally, to qualify for the credit when purchasing, buyers must fall below certain income thresholds, choose a vehicle under a set price cap and ensure both the car and its battery components meet U.S. sourcing rules.

The leasing strategy takes advantage of a rule in President Joe Biden's Inflation Reduction Act that treats leased vehicles as commercial purchases. Because commercial vehicles are exempt from those restrictions, dealers can apply the credit to nearly any EV and pass the savings along to customers — even for models or buyers that wouldn't otherwise qualify. It's often referred to as a loophole by industry insiders.

As a result of the relaxed rules for leasing, lease rates for EVs soared from around 15% in 2022 to 67% by March 2025, according to Cox Automotive data.

“This is why leasing is so popular,” says Stephanie Valdez Streaty, director of industry insights at Cox Automotive. “You can buy any vehicle, no matter how much you make, that potentially gets that full $7,500 off.”

But time is running out. The rebate is scheduled to end after Sept. 30 under President Donald Trump's “big beautiful” tax-and-spending package, giving drivers just a few months to claim the credit before it disappears. The deadline applies to both new and used electric vehicles, whether leased or purchased.

Leasing vs. buying an electric vehicle

Leasing is often cheaper than buying a new car — especially while the $7,500 EV credit still applies — but it comes with trade-offs.

When you lease, you pay to use the car for a set period, typically two to four years, rather than owning it outright. The dealer or financing company retains ownership, and you return the vehicle at the end of the lease unless you choose to buy it.

The benefits of leasing any type of vehicle generally include the following:

• Lower monthly payments, compared with financing
• Smaller down payment, if any
• Warranty coverage throughout the lease
• Access to newer models every few years
• Flexibility to walk away or upgrade when the lease ends

However, there are downsides. Here area few to generally keep in mind when leasing:

• No ownership or equity in the vehicle, which also means you can't resell it later
• Mileage limits, typically 10,000 to 15,000 miles per year, with overage fees
• Limits on customization and possible wear-and-tear charges
• Fees for ending the lease early if your plans change

Leasing can make sense if you want lower payments, don't plan to keep the car or aren't fully committed to owning an EV. The $7,500 rebate makes it more appealing, but whether it's the right choice depends on your budget, driving habits and long-term plans.