Considering an Electric Vehicle? Massachusetts will help pay for it!

Are you considering leasing or purchasing a fully electric vehicle (EV)? Massachusetts is one of the most generous states in giving its residents money to purchase or lease an EV. According to a recent article from CNET, the Commonwealth ranks 3rd in the nation on this front. The state-specific incentives are in addition to any Federal programs that you may also qualify for. Let’s take a closer look.?

First, an overview of the Federal incentives available for purchasing an EV. If you purchase an EV, you may qualify for a tax credit of up to $7,500. This credit will offset the cost of the vehicle. However, the availability of this credit is based on your income. Single filers must earn $150,000 or less per year, for Joint filers, it’s $300,000 or less. These income figures are based on your Adjusted Gross Income (AGI).?

However, there is a way around the income cap if you choose to lease the vehicle. Leased vehicles are considered commercial vehicles and as so, can still take advantage of the $7,500 credit. The vehicle manufacturer needs to pass the tax credit on to you in the form of a reduced cost of your lease. Most EV manufacturers do this. Take note: the $7,500 is not reducing the vehicle's sticker price; it is reducing the total cost of the lease. So, if you have a 3-year lease that will cost $30,000, after the $7,500 is applied, your new three-year least cost would be $22,500. Over a 36 month lease, that translates into a $625 per month payment that would have been an $833 without the credit. Ignoring all other lease costs and fees of course. ?

Speaking as the proud owner of my third EV, leasing is a smart move for a number of reasons in addition to the Federal tax credit. First, EV technology is changing very rapidly. It’s entirely possible that the EV you buy today, will have technology that is obsolete in a year or two. Secondly, the residual values of EVs have been low over the past few years (their values have declined rapidly after purchase). If you own the EV, that’s your problem, if you lease, it’s the bank’s problem. Lastly, if you are considering an EV from a new car manufacturer, it’s very possible that the company could go out of business. Again, if that happens and you own the car, it’s your problem. If you lease, it’s the bank’s problem. ?

Now let’s look at the Massachusetts specific incentives. The Commonwealth’s EV incentive program is aptly named the MOR-EV program. See what they did there?! The program has two elements, one for cars and one for trucks. The cars program could earn you a rebate of up to $3,500 on a new or used EV. The Total MSRP of a new vehicle cannot exceed $55,000. The Total MSRP of a used car cannot exceed $40,000. Take note here: the MOR-EV Program’s definition of Total MSRP is sticker price plus destination charge. This is a very important detail in the program because if you go one dollar over, you will not qualify.?

Unlike the Federal tax credit, the MOR-EV program is not limited by your income. Additionally, under the program you’ll receive a rebate, not a tax credit. The rebate can be sent to you directly in the form of a check, or if the dealership allows it the rebate can be applied directly at the time of purchase. You may qualify for additional incentives based on your income and/or if you are trading in an old internal combustion engine vehicle (the vehicle must be at least 12 years old among other restrictions). You can get all of the details of the MOR-EV program from their website here: MOR-EV

If you are considering an electric pickup truck or certain large electric SUVs, then you’ll absolutely want to check out the MOR-EV Trucks program. Under this program the rebate increases to $7,500. The vehicle must have a Gross Vehicle Weight Rating (GVWR) between 6,000 and 10,000 pounds and cost no more than $80,000. Again, this $80,000 cap is the sum of both the sticker price and the destination charge. Some examples of vehicles that could qualify under this program are: Chevy Silverado EV, Ford F150 Lightning, Rivian R1T (pickup), or Rivian R1S (SUV).?

Under both MOR-EV programs, you can lease or purchase the vehicle to qualify for the incentives. If you lease, the minimum lease term must be 36 months.

As Massachusetts residents, we are fortunate to have these incentives available to us. Given that the cost of EVs have declined recently, it’s not difficult to see how you could be leasing or purchasing an EV very inexpensively when all incentives are factored in. In many cases, even less expensively than their gas engine counter parts. You’ll of course always want to consider all other costs associated with an EV such as the State’s excise tax, charging costs, etc. Additionally, the MOR-EV program states that the program is subject to the availability of State funds.

For Breakwater clients, I’m always available to discuss this and any other car buying decision that you may be considering. ? ?

Enjoy the ride, Abe

Breakwater Financial, LLC is a registered investment advisor. The content of this article is for informational and educational purposes only and is not to be considered investment, legal or tax advice. Past performance is no guarantee of future returns. Investing involves risk and possible loss of principal capital. If you have any questions regarding this blog post, please contact us.