By Jon Leidgen – Owner, Alpha Leasing Company, Inc.
Planning to take advantage of tax credits when you buy an electric vehicle? Be prepared to jump through a lot of hoops. Dental practice owners have a better option – learn how you can maximize your tax benefits when you lease an EV for your business.
If you own your own dental practice, how you acquire a vehicle can have huge tax implications. One of the reasons electric vehicles (EV) are such a hot item right now is because of the potential tax rebates, but as a business owner, there’s a better way to maximize the tax benefit of acquiring a vehicle.
The Problem with EV Tax Credits for Business Owners
The EV tax incentive is essentially a consumer tax credit that comes with a lot of restrictions such as:
- Manufacturers Suggested Retail Price (MSRP) – Vehicles can’t exceed $55K for a sedan or $80K for an SUV. If you’re thinking about a luxury SUV such as BMW iX, or a sporty Ford Mustang Mach-E with all the accessories, neither will qualify for a rebate.
- Income Limits – Modified adjusted gross income can’t exceed $300K when filing as joint, $225K for head of household, and $150k for all other taxpayers. Any higher and you won’t qualify for the tax credit.
- Battery Components – As of 2024, to qualify for the first $3,750 credit, some of the EV’s battery components must be produced or assembled in North America. To get an additional $3,750 (for the full $7,500 tax credit) a portion of the critical minerals in the EV battery must also be mined or processed in the U.S. Due to limited manufacturing capacity in the U.S., this is proving to be a difficult hoop for many manufacturers to jump through.
Another Option to Maximize Tax Benefits
Dental practice owners who claim a vehicle as a business expense have another, better option. Instead of trying to qualify for the EV consumer tax credit that maxes out at $7,500, you can seek a commercial tax credit by leasing a vehicle.
Customize Tax Benefits by Leasing
A customized lease on a vehicle creates a wide path to tax savings based on your specific situation and needs. Unlike the EV consumer tax credits, commercial tax credits are not limited to restrictions regarding income, MSRP, make, model or where a vehicle is manufactured. You are free to choose the car you want.
Alpha Leasing works with dealers all over the country to design lease agreements that meet our customer’s specific needs with terms that are designed to maximize the tax benefits for their situation.
Commercial Tax Credit Let’s You Get the Car You Want
Recently we had a client who wanted to purchase a Tesla Model S. Under the consumer tax credit, he wouldn’t receive a tax rebate because the MSRP for the sedan is $75K, which is $20K over the limit to qualify for any kind of tax credit.
Commercial tax credits offer a different outcome. When an EV is acquired by lease it qualifies for the tax credit, which goes to the leasing company as the title holder. Our company then passes the tax credit on to the client. If our client had bought the car directly from Tesla, he wouldn’t have received the tax rebate. By leasing it from our company, he lowered his cost by $7,500.
Competitive Advantage Over Leasing from a Dealership
There is a big difference between leasing from a dealership versus Alpha Leasing. The advantage we bring is that we have a complete set of tools that allow us to customize your lease so as to provide the maximum tax benefit based on your unique circumstances.
Many of our clients are referred to us by tax professionals. When you come to us, we talk cars, but we also spend time asking a series of questions that help us get a clear picture of your financial situation. Your answers tell us what kind of lease would benefit you most. Some clients need payments to be high initially, for others, it better to start low, and still others may benefit from lease payments that fluctuate.
We customize the terms of the lease to provide the greatest tax benefit to the client. Dealers don’t have the same flexibility, because they are restricted by their agreements with the manufacturers. They’d like to do what we do, but they can’t. While we have a toolbox packed with every financial tool imaginable, a dealer has to follow the manufacturer’s rules.
Serving Clients for 40 Years
Alpha Leasing was a unique concept when it was started 40 years ago. We can customize a lease to maximize your tax benefits without qualifiers or restrictions:
- Lease any car regardless of make, model, price
- No income restrictions
- Anywhere in the country
The business has evolved over time, but the core mission has never changed – we help clients get the best deal when they acquire a vehicle and get the biggest tax benefit possible. We can also set it up so that you can easily purchase the vehicle at the end of the lease term.
If you have questions about how you can maximize your tax benefits when buying a vehicle, contact our team at Alpha Leasing. We can help you get the vehicle you want and the tax credit you deserve.