Forums

$7500 tax credit expiration

$7500 tax credit expiration

The IRS.com website has information about the $7500 tax credit for purchase of an electric vehicle. The credit starts at $2500 and grows with the size of the battery. All Tesla models including the Roadster, Model S, and Model X qualify for the maximum credit of $7500. The credit has an expiration: "The credit begins to phase out for a manufacturer’s vehicles when at least 200,000 qualifying vehicles manufactured by that manufacturer have been sold for use in the United States."

The "VIN Tracking" thread on this forum references VINs in the 130,000 range, and production is likely still set to increase month-over-month with Model X deliveries. If that does indeed continue, it's likely that the tax credit will end sometime in 2017. Are there any predictions on this? I wonder if the tax credit is included in the Model 3 "Under $35,000" price target.

Thoughts or comments?

Mathew98 | March 17, 2016

Search TMfans.com on this topic.

The credits won't run out until 200K US deliveries and then will taper off the next two quarters. There won't be accumulated 200K sold in the US until Model 3 is well into its second year of production.

My prediction 2Q 2019.

steveg1701 | March 17, 2016

It's been stated repeatedly that the 35K target price is BEFORE any tax incentives

jordanrichard | March 17, 2016

VIN numbers are assigned to ALL cars, not just those sold in the U.S. So there are nowhere near 130,000 Tesla's in the U.S.

The starting price of the Model ≡ is said to be $35K before any tax incentives. With that said, you can't simply take $35K and subtract $7500, to get a net price of $27,500. Each person's tax situation will determine how much of that $7,500 credit will benefit them. Also, each state has its own EV tax incentive, if any at all. That is why Tesla is properly using the "before tax incentives", when quoting a price.

Compare that with GM's $30K price for the Bolt. Their price includes, meaning after, the Fed $7,500, which is seriously misleading because not everyone will actually benefit from that $7,500. Meaning not everyone will be able to come up with a net price for the Bolt by subtracting that $7,500.

Haggy | March 17, 2016

You can't factor the tax credit into the net price, but if you want it to affect your monthly expenses, you can adjust your withholding accordingly so it comes off your monthly expenses instead of getting it back at the end. You'd eventually get what's left as a lump sum assuming you would have gotten it as a refund, and you'd be able to use that toward future loan payments. In theory if you understand your tax situation and know how much of a refund you would get, assuming you were going to get at least a marginal refund without this, you can come close to emulating the monthly expenses of having a car loan based on the after rebate price.

Likewise, you could lower estimated tax payments accordingly if that better reflects your tax situation, in which case you could accrue money that could be set aside to go toward car payments in the future. This isn't something trivial that I'd casually mention to any prospective buyer, and there will be some who won't owe a total of $7500 in taxes for the year. The lower your income, the harder it is to work around that.

tcandmm | March 17, 2016

I think I read somewhere in a recent Forbes article that the expected 200K EV quota for the fed tax benefit is expected to reach by mid-2018 based upon current EV production rate and sale trend.

david | March 17, 2016

Maybe TSLA, GM and Nissan will fire up the corporate lobbying machine to keep the tax credit gravy train going given they are the only 3 automakers with an advantage in this space. Toyota, Honda, VW, BMW, etc are all much further behind (I test drove an i3 and it cost $20k more than a leaf and drove worse). Keeping the tax incentive going would definitely help them press their advantage. All of that said, obviously it can't go on forever.

JAD | March 17, 2016

The oil subsidies have gone on forever...