Tax Man Cometh!

Tax Man Cometh!

I have a question that I’m not sure if anyone can even answer yet. Has anyone thought about how the tax situations will be handled?

1.) Since Tesla doesn’t have an actual dealership, will we pay California taxes or our local tax?
2.) The Signature’s base price is OVER $75,000. Will this require owners to pay the dreaded luxury tax?

Just a couple of things on my mind as I start considering an upgrade to my reserve. I mean Cali tax is about 2.5% higher than here in MI and the luxury tax I’m estimating to be around $5000.00. Those two things pretty much negate the $7500 tax credit.

Mycroft | 19 gennaio 2012

1. Unless you take possession of the car in California, you won't be paying CA taxes.
2. What luxury tax???

Sudre_ | 19 gennaio 2012

I was curious about this. I know when I buy things out of state online I don't pay sales tax at the time of purchase. If I purchase the car in IL I will refuse to pay IL sales tax because I live in MO and I will most likely have to pay MO sales tax. I am curious how they are going to handle this. Typically when you go into a store in a state and purchase a low cost item you don't care because you'r not going to claim in your state anyway. But for large purchase such as this on a product I have to register with my state it's a different story. Maybe someone here knows how that might work..... Roadster owners?

Mycroft | 19 gennaio 2012

It varies by state Sudre. Most states only charge sales tax if you register it in that state. You should be able to call or email the manager of the Tesla store where you're going to buy the car to get the information you're looking for.

I think that California is unique in that you have to pay CA sales tax merely by taking possession of the car in CA. Very weird.

petero | 19 gennaio 2012

I assume, you will pay sales tax where you take delivery of the car. In most cases it will probably be at your closest Tesla Dealership.

I had a not so interesting thing happen to me. I live in California and bought a used car in Arizona. Instead of the 7.75% sales tax I would pay in Ventura County CA (Los Angeles County is a higher rate )I had to pay 9.5% sales tax because AZ and CA shared the love. They would not grant me a one way, 48 hour, waiver . This could happen to you if your nearest dealership is in another state. So please check it out.

Sudre_ | 19 gennaio 2012

Thanks Mycroft. Chicago sales tax is over 10%. I'd be paying around 7500 in taxes there. Here I'd pay 4300. That would be two or more options I'd have to drop.

Mycroft | 19 gennaio 2012

That's why you need to contact the store manager! I'm sure they actually know this stuff.

Sudre_ | 19 gennaio 2012

I think I found the answer from.

" This happens more often than you'd think. I used to work for a Bentley/Lamborghini store in Chicago and every week people would fly in to buy and drive home. The dealer will issue you a temporary registration that is valid for a grace period between purchase and home-state registration. This is perfectly legal documentation for which you can cross state lines until you get to the state where you intend to register, and then pay sales tax on the vehicle purchase."

Teoatawki | 19 gennaio 2012

If you take possession at a California location, you WILL pay CA sales tax. If you register it in another state, normally you pay the difference between CA tax and your local tax, if yours is higher. If TM delivers the car to your home, that would be the point of sale, and you would be liable for sales tax for that location. If you picked it up at their store or service location, then that becomes point of sale.

stevenmaifert | 19 gennaio 2012

Speaking of taxes ...

I wonder how long it will take the Federal and State governments to figure a way to recoup the excise taxes ( that EV owners won't be paying for using the roadways. Hopefully they will cut us some slack for a while to promote the sale of EVs, but sooner or later, that tax man will cometh too :)

Mycroft | 19 gennaio 2012

WA state already tried to tack on a $100 annual fee for EVs. It was shot down, but they're eventually going to have to do something because gas tax revenue is going down fast!

Geoff2013 | 19 gennaio 2012


I know that WA state exempts us from sales tax on electric vehicles...but don't know anything about a luxury tax here. Any ideas?

JohnQ | 19 gennaio 2012

In 1990 the US Congress passed a luxury tax on vehicles that exceed $30,000. The legislation was fully repealed in 2002. The tax was 10% on the amount over $30k.

There are no luxury sales taxes on personal vehicles at the state level that I am aware of. Connecticut (my fair state) is considering a luxury tax on vehicles that exceed $50,000 but to date no legislation has been passed.

bhs1 | 19 gennaio 2012

Usually you pay the sales tax for the state you live in. I live in southeastern PA, but whether I buy a car in PA, DE, or NJ, I would pay the same 6% PA sales tax. I verified this about a year ago when I purchased a new car. (I thought I would save some money by buying it in DE, but no such luck.) However, I believe PA exempts EVs from paying sales tax. That's a nice little savings if it's correct!

Crow | 19 gennaio 2012

You will pay sales tax in the state in which you take delivery of the car. Good news for those lucky reservation holders in states with an EV sales tax exemption. If you live in an exemption state, ship the car home rather than taking delivery in CA.

BruceR | 19 gennaio 2012

STATE tax rules vary. Everyone simply has to check their home state's rules. I have purchased vehicles in several states in the northeast and they all use the registration address as the location detemining the tax rate, not where you take delivery. Last year in Ohio , I purchased a RAV 4 in a county that charges 8.5% sales tax, but because I live in a lower tax rate county, I was only charged 6.25%....

No luxury Tax in USA, but some of our lucky compatriots elsewhere get this one. Was Alan thinking of the gas guzzler tax which IS still in effect? Applies to most of TESLA's sportier competition, but obviously not to EVs.

Crow | 19 gennaio 2012

Please excuse my Western bias. They do vary from state to state. Exceptions, ask your advisor, yada, yada, yada.

Robert.Boston | 21 gennaio 2012

Re highway tax dollars: this has been a growing issue as fleet MPG has been rising. (Up in Maine, the chatter is that part of the reason why ethanol-blends are popular with lawmakers is that it lowers the MPG for a vehicle, thereby increasing gallons of gas used and tax receipts.)

The obvious approach in states, like MA, that require annual inspections, would be to shift to a flat rate per thousand miles. (The inspection provides an independent verification of the odometer read and potential a point of tax collection.)

The benefit of the current system is that it places a higher price on driving low-MPG vehicles, accomplishing a societal goal.

JohnQ | 21 gennaio 2012

@RB Heavier vehicles also tend to have low-MPG and they damage roads and highways more quickly than lighter vehicles. So, in addition to the societal goal, you target users who increase maintenance costs (more miles, heavier vehicles).

EdG | 21 gennaio 2012

Looking at an old study (c.f. numbered page 23 of ) road damage from one 18-wheeler is equivalent to 9600 cars passing. They don't weigh 9600 times as much, but doubling vehicle weight does a lot more than doubling the road damage. There's a good reason they should pay the high road taxes they're charged in the US.

Brian H | 22 gennaio 2012

Obviously, they need to cut the weight per tire in half. I wonder what a 36-wheeler would look like -- same above-axle dimensions, of course. And same weight allowances.

Timo | 22 gennaio 2012

In here (I have no clue about road conditions in US), roads that have been damaged by heavy vehicles usually don't get that damage by surface wear. Usually the main cause is bad road base, and tarmac kind of gets "pushed away" and dented. Dent enough and there is a crack, get some rain and you have a pothole.

Ancient romans did good roads. Too bad that skill of making decent roads had to be reinvented after dark ages.

stephen.kamichik | 22 gennaio 2012

In Quebec we have the worst roads in North America. We also have the highest taxes in North America.

Douglas3 | 22 gennaio 2012

To be fair, stephen.kamichi, most places don't get the winter freeze/thaw cycles that we get in southern Quebec and Ontario. A bad winter can wreak havoc on the roads here.

Slindell | 22 gennaio 2012

Um, Timo? The "decent" Roman roads were built by slaves. And the heaviest thing they needed to support were a two-donkey cart filled with more slaves. I don't think we want to go back to that.

stephen.kamichik | 22 gennaio 2012

Douglas3....You are quite right, however, construction in Quebec is essentially subpar. Our premier has called an inquiry into this. It is known that road construction in Quebec costs 30% more than anywhere else in Canada.

Brian H | 22 gennaio 2012

The other thing Quebec is famous for is government corruption. I wonder if there's a connection...????

Timo | 23 gennaio 2012

@Slindell, there were a military show in Italy not too many years ago and people were worried if those roads could hold the weight of the tanks. It turned out that those were no problem at all to old roads, but modern roads suffered from them.

Those were (and are, where they have been maintained) good roads.

The fact that they were made by slaves is just how things were back in those days. In ancient Rome "slave" status was generally not that bad as it sounds today. They were more like servants than slaves in US when things were still barbaric. Slave back in those days did have some "human rights", some could even earn money that was their own. Way more complex status than just property owned by someone.

Just the fact that there still are original Roman roads after two thousand years tells how well those were made. Quality like that could not be made without proper engineering and skills, so I bet workers that build those roads were not slaves in modern sense of the word, if they were slaves at all.

I'm not saying that we can't build better roads now, I just admire the effort they put in the engineering. Something that roads build even today in many many cases still lack. Bases are made poorly and frost and rains wash it away and you have a pothole at minimum, entire road gone at worst.

Volker.Berlin | 23 gennaio 2012

Timo, it probably helped that all (long-distance) roads back then were "military grade" by definition. In the same sense, cost was not an issue with building these roads (even with a slave work force, good roads were more expensive than simple ones).

Something similar can be seen in Germany, where the core of the Autobahn network dates back to the "Third Empire" (Hitler). As far as I know, the inheritance in this case is in the strategic layout of the network, which the major routes still follow today, rather than in the particular road substance, which I assume has been replaced long since. But I may be wrong.

stephen.kamichik | 23 gennaio 2012

Brian H......Correct. I did not want to mention it for fear of a bullet in the back of my head (execution style).

sbeggs | 16 ottobre 2014

It turns out, this thread is where @Code Orange got his inspiration.

info | 16 ottobre 2014

Cones were much larger back then.

hpjtv | 17 ottobre 2014

oopss..thought I'd find Code Orange here.. anyways, what's everyone complaining about? You get a Federal and/or State tax credit and the sales tax is tiny. We in Canada (except Ontario and Quebec) don't get any credit and the tax rate here is 5-15% (with average being 12/13% in most provinces).

logicalthinker | 17 ottobre 2014

@sbeggs, such heresy!

nchu | 19 ottobre 2014

Taxes are calculated based on your registered location of the vehicle. It appears tesla takes the taxes upon delivery of your vehicle