Tesla Credit

Buying a Tesla?   Might want to do it now.

You will never, ever, hear me tell a client to buy a Tesla as a tax savings opportunity.  Well, except for maybe right now…

At the date of this writing, December 11, 2018, there are 20 days left to buy a Tesla and receive the full $7,500 federal tax credit.  The hybrid auto credit available for each hybrid manufacturer is set by law to decrease, and ultimately expire, once 200,000 sales occur.  For Tesla, this mark was reached in September of 2018 which triggered the beginning of phase out period.  What this means for the potential Tesla owner (who just can’t help but dream about the roller coaster-like acceleration that will be at their disposal) is that the full credit is only available through the end of 2018.  After that the credit will decrease by 50% for the first six months of 2019 to $3,750, followed by another decrease of 50% to $1,875 for the second half of the year.  The credit will phase out completely for purchases after December 31, 2019.  A quick summary of the credit phaseout timeline is provided below.

  • Now through December 2018 – $7,500
  • Jan 2019 through Jun 30, 2019 – $3,750
  • July 1 through December 31, 2019 – $1,875
  • January 1, 2020 – $0

So, while I would never advise buying a Tesla as a tax planning strategy; if the purchase of a shiny new Tesla is a forgone conclusion for you, you may be able to save some money by purchasing sooner rather than later.

 

David Knittel | Director of Tax | PracticeCFO

WordPress Image Lightbox