Following significant advocacy by NADA, on December 20th, the U.S. Department of the Treasury renewed the “safe harbor” for Section 45W clean vehicle tax credits for commercial vehicle sales in 2024. What does this mean: Leasing companies will be able to continuing leasing qualifying EVs in 2024 and pass on to consumers up to $7,500 from the tax credit they receive. In addition, other commercial buyers will be able to continue to claim tax credits on their EV purchases.
Section 45W commercial clean vehicle tax credits are much more flexible than 30D credits and are not subject to restrictive criteria such as where a vehicle’s battery components or minerals are sourced. Accordingly, for leases, the credit is available for virtually any consumer lease of an EV, regardless of adjusted gross income of the lessee. The leasing company simply passes the value of the tax credit to the customer as a savings. 45W is the reason EVs are leased at a much higher rate than other vehicles.
Section 45W also applies to commercial vehicles above 14,000 GVWR and provides a credit of 30% of the cost basis up to $40,000 (15% for larger plug-in hybrid vehicles).
Don’t forget, the 30D tax credit for new vehicles will see changes in 2024, based on new criteria for eligible vehicles.
NJ CAR will keep dealers informed of any new developments.