EV Lease vs. Buy Calculator (Post-2025)
Compare the total cost of leasing vs. buying an EV with correct post-2025 federal tax logic and state incentives.
EV Lease vs. Buy Calculator: Compare Total Cost After the Federal Tax Credit Ended
This calculator compares the total cost of leasing vs. buying an EV using post-2025 federal tax rules. Before you enter your numbers, here is the short answer to the policy question most shoppers are asking: the federal §30D purchase credit and the §45W lease pass-through ended for vehicles acquired after September 30, 2025. Manufacturer discounts are not tax credits, and calculators that still assume a $7,500 federal credit for a purchase will give you the wrong answer.
Use the interactive calculator on this page to run your own numbers, then read below for what the result means, how each formula works, and what assumptions can change the answer.
Key takeaways
- The federal §30D clean vehicle credit does not apply to vehicles acquired after September 30, 2025.
- The §45W commercial clean vehicle credit, which many leases used to pass through as a $7,500 discount, was also terminated for post-September-2025 acquisitions.
- Some automakers have offered voluntary lease discounts since then. Those are manufacturer discounts, not federal tax credits, and they vary by make, model, and month.
- A lease and a loan are not directly comparable unless both are measured over the same time horizon and the buy side is credited with the vehicle's resale value at that point.
- Money factor is the lease equivalent of an interest rate. Multiply it by 2,400 to get the approximate APR, and watch for dealer markup.
- State programs such as California's MyFirstEV and New York's Drive Clean Rebate can apply to leases as well as purchases, but eligibility rules differ.
- Resale value is an estimate, not a guarantee. Enter your own assumption rather than trusting a hard-coded forecast.
What changed after September 30, 2025?
The short version: the federal tax credits that shaped most lease-vs-buy math for the past several years no longer apply to vehicles acquired after September 30, 2025. That includes the §30D credit that buyers used to claim on their federal return and the §45W commercial credit that leasing companies used to pass through as a capitalized cost reduction.
The Congressional Research Service and IRS guidance confirm the termination. The change came through the 2025 budget reconciliation law commonly referred to as the One Big Beautiful Bill Act (OBBBA), which set the September 30, 2025 cutoff.
What that means in practice:
- If you bought a qualifying EV and took delivery on or before September 30, 2025, the old §30D rules may still apply to your return.
- If you acquire an EV after that date, do not enter a $7,500 federal credit on either the lease or the purchase side of a calculator. It is not available.
- If a dealer or a calculator tells you the $7,500 is still "in the lease," ask them to show you the line item. In most cases, what remains is a voluntary manufacturer discount, which is a different thing.
How to use this calculator
The calculator above accepts two sets of inputs and returns a single comparison over the same time horizon.
Inputs you will need
- State and acquisition date. The state determines which state incentives may apply. The acquisition date determines whether any federal rule applies at all.
- Vehicle price. Use the negotiated price, not just MSRP, if they differ.
- Lease terms. Money factor, residual value, lease term in months, and any down payment or cap cost reduction. Your dealer's lease worksheet should list all four.
- Loan terms. APR, term in months, and down payment. Use the rate you were actually quoted, not a generic average.
- Optional overrides. Sales tax rate, a manufacturer discount you can document, and a state incentive amount you have verified.
What the calculator shows
- Monthly lease payment and monthly loan payment.
- Total lease cost over the lease term.
- Total buy cost over the same horizon, net of estimated resale value.
- The net difference between the two, with a color-coded label.
- The break-even month, if the cheaper option flips within the comparison window.
- Sensitivity notes showing how a money factor markup or a 10% lower residual changes the lease payment.
Lease vs. buy total cost breakdown
The calculator does not compare a 36-month lease against a 60-month loan at face value. It normalizes both options to the same horizon so the numbers are actually comparable. Here is how each side is calculated.
How the lease payment is calculated
A lease payment has two parts: depreciation and a finance charge.
Monthly lease = ((Cap cost − Residual) ÷ Lease term) + ((Cap cost + Residual) × Money factor)
- Cap cost is the negotiated vehicle price minus any down payment, manufacturer discount, or lease-eligible state incentive.
- Residual is the expected value of the vehicle at the end of the lease, as stated on your lease worksheet.
- Money factor is the lease finance rate expressed as a decimal. Multiply it by 2,400 to get the approximate APR. A money factor of 0.00125 is roughly 3.0% APR.
Total lease cost is the down payment plus the monthly payment multiplied by the lease term. If the worksheet lists a disposition fee, add it.
How the purchase cost is calculated
The purchase side uses standard loan amortization.
Monthly loan = PMT(APR ÷ 12, Loan term, Loan principal)
Loan principal is the vehicle price plus sales tax, minus the down payment and any purchase-eligible incentive. Total buy cost over the comparison horizon is the down payment plus the monthly payments within that horizon, plus any remaining loan balance if the loan term is longer than the lease term, minus the vehicle's estimated resale value at the end of the horizon.
Why we normalize both options over the same horizon
A 36-month lease and a 60-month loan cover different periods. Comparing the lease's 36 payments against the loan's 60 payments overstates the buy cost, because the buyer still owns an asset after month 36 while the lessee does not. The calculator fixes this by subtracting the vehicle's resale value from the buy side at the end of the lease term. If you would rather not use the lease residual as a proxy for resale value, uncheck the "Assume resale equals lease residual" box and enter your own estimate.
Break-even analysis: when does buying become cheaper?
The break-even month is the first month where the cumulative cost of buying drops below the cumulative cost of leasing, after accounting for the vehicle's resale value at that point. It is a more useful decision signal than a 3-year or 5-year total because it shows you when the answer flips, not just which side wins at one arbitrary checkpoint.
If the break-even month is early, buying becomes the cheaper path quickly and the case for leasing weakens. If the break-even month falls after the lease term ends, leasing wins for the period you are actually comparing, even before factoring in the option value of walking away from the car at lease end.
Two caveats. First, break-even depends heavily on your resale assumption. A higher resale value makes buying look better; a lower one makes leasing look better. Second, the break-even month does not account for insurance, maintenance, or registration differences between the two paths. Those costs are usually small in year one and can grow over time, especially for tires and repairs.
State incentives that apply to leases vs. purchases
Federal policy is only part of the picture. Several states run their own EV programs, and some of them explicitly include leases. The table below covers two programs that are active as of late 2026. Always verify current rules with the state agency before you rely on an incentive in a purchase or lease negotiation.
| Program | State | Amount | Applies to lease? | Applies to purchase? | Key restrictions |
|---|---|---|---|---|---|
| MyFirstEV | California | $1,750–$3,500 | Yes | Yes | First-time ZEV buyers; MSRP caps around $50,000 for new and $25,000 for used; participating automakers only. |
| Drive Clean Rebate | New York | $500–$2,000 | Yes | Yes | Dealer participation required; amount tiers by vehicle range and price; program funding can be exhausted. |
If your state is not listed, check your state energy office before entering an incentive amount. The calculator lets you type a verified amount and specify whether it applies to the lease side, the purchase side, or both. Do not apply an incentive to a side it does not cover. A purchase-only rebate applied to a lease will make the lease look artificially cheap.
Federal tax credit vs. manufacturer discount
This distinction matters more than any other in the current market, because several ranking calculators still blur the two.
| Feature | Federal tax credit | Manufacturer discount |
|---|---|---|
| Who provides it | Federal government | Automaker or captive finance arm |
| Current status for acquisitions after Sept 30, 2025 | Terminated for §30D and §45W | Varies by make, model, and month |
| How it is applied | Tax return (§30D) or capitalized cost reduction through the lessor (§45W, pre-termination) | Point-of-sale price reduction or lease subsidy |
| Income limits | Yes, under the former §30D rules | No |
| Verification | IRS and CRS guidance | Official automaker communication |
If a dealer tells you the $7,500 is "still in the lease," ask them to show you the line item and the source. In most cases, what remains is a manufacturer discount that functions like a price cut. That can still make a lease attractive, but it is not a federal tax credit and it should not be entered as one. The calculator's manufacturer discount field is labeled that way for this reason.
Methodology and sources
The formulas above are standard finance formulas, not proprietary models. The policy status reflects the termination of §30D and §45W for vehicles acquired after September 30, 2025. State incentive amounts reflect the programs listed as of late 2026.
Formulas used:
- Lease payment: ((Cap cost − Residual) ÷ Term) + ((Cap cost + Residual) × Money factor)
- Money factor to APR: Money factor × 2,400
- Loan payment: Standard amortization at APR ÷ 12 over the loan term
- Remaining balance: Amortization remainder at the comparison month
- Break-even month: First month where cumulative buy cost (net of resale) is less than or equal to cumulative lease cost
Sources:
- Congressional Research Service, analysis of the clean vehicle credit termination.
- IRS guidance on §30D and §45W.
- The 2025 budget reconciliation law (OBBBA), which set the September 30, 2025 cutoff.
- California Air Resources Board and the Governor of California's office, MyFirstEV program details.
- New York State Energy Research and Development Authority (NYSERDA), Drive Clean Rebate details.
Last verified: October 2026. If a federal or state rule changes, this page is updated within five business days.
Limitations
- Resale value is an estimate. The calculator can use the lease residual as a proxy, or you can enter your own number. Neither is a guarantee of what the car will be worth at lease end.
- Manufacturer discounts vary. Some automakers subsidize leases more aggressively than others, and those programs change monthly. Do not hard-code a discount into your decision without a dated quote.
- State programs can exhaust funding. A rebate that is open today may be closed by the time you take delivery. Verify before you sign.
- Insurance, maintenance, and registration are not modeled. Those costs differ between leasing and buying in ways that depend on your state, your insurer, and your driving.
- Money factor markup is common. The sensitivity note in the results shows how a 0.00050 markup changes your payment, but only your dealer's worksheet shows the actual markup.
- The calculator does not provide tax or legal advice. For your specific situation, confirm eligibility with the IRS or a tax professional.
Frequently asked questions
Did the EV tax credit end?
Yes, for vehicles acquired after September 30, 2025. The §30D purchase credit and the §45W commercial clean vehicle credit no longer apply to those acquisitions. If you took delivery on or before that date, the old rules may still apply to your return.
Can I still get a lease credit?
Not a federal tax credit. The §45W pass-through that many leases used to claim was terminated for post-September-2025 acquisitions. Some automakers have offered voluntary discounts that function like a lease subsidy, but those are manufacturer discounts, not tax credits, and they vary by make and model.
Is leasing better than buying in 2027?
There is no universal answer. It depends on your lease quote's money factor, the residual value, your state incentives, your resale assumption, and how long you plan to keep the car. The calculator exists precisely because the answer flips under different inputs. Run your own numbers rather than relying on a rule of thumb.
How do I calculate lease money factor?
Money factor is the lease finance rate expressed as a decimal, and it is usually shown on the lease worksheet. Multiply it by 2,400 to get the approximate APR. If a money factor of 0.00125 corresponds to about 3.0% APR, a money factor of 0.00175 corresponds to about 4.2% APR. The difference may not look large on paper, but it adds up over a 36-month lease. Ask your dealer what the base money factor is for your credit tier and compare it to what is on the worksheet.
Do state incentives apply to EV leases?
Some do and some do not. California's MyFirstEV and New York's Drive Clean Rebate both apply to leases as well as purchases, subject to eligibility rules. Many other state programs are purchase-only. Check your state energy office before you assume an incentive applies to the path you are considering.
What happens if I want to buy out my lease after the credit ended?
A lease buyout is a separate transaction from the original lease. The buyout price is typically the residual value plus any fees specified in your contract, and it does not change because the federal credit ended. Whether a buyout makes sense depends on the car's current market value relative to the residual. If the market value is below the residual, buying out may not be attractive; if it is above, it may be. Run the numbers against a current valuation rather than the original residual alone.
Why is the lease still cheaper if the credit ended?
When a lease payment comes out lower than a loan payment even without the federal credit, the usual reasons are a subsidized money factor, an inflated residual value set by the captive finance arm, or a manufacturer discount applied as a capitalized cost reduction. None of those are federal tax credits, but they can still make a lease competitive. The calculator's sensitivity note on money factor and residual shows you which of those levers is doing the most work in your quote.
Why does the calculator use the lease residual as the default resale value?
Because the residual is the only resale estimate that is specific to your lease quote and your vehicle. It is set by the lessor, not by a generic depreciation curve, so it is a more honest starting point than a blanket assumption. If you have a better estimate, uncheck the box and enter it. The comparison is only as good as the resale assumption behind it.
Related tools
This calculator is the first in a set of EV ownership tools we are building around the same methodology. The related tools will include an EV lease payment calculator, an EV lease buyout calculator, and an EV insurance cost estimator. Each will use the same money factor, residual value, and state incentive definitions as this page so the numbers stay consistent across tools. Links will be added as each tool is published.
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If you have not already run your own numbers, use the calculator on this page and compare the result against the methodology above. If the result and the method do not match your understanding of your lease worksheet, the worksheet is the source of truth.