Tax Credit Cut from $7,500 to $0 for Buying Tesla Cars after the end of year 2019
The government has had many programs related to taxes and cars over the years. Back in the day, the government introduced “Cash for Clunkers” program and gave up to $3,000 for purchasing a new car.Well, that program has been long gone but the other incentive consumers have been utilizing lately is the federal tax credit on purchase of alternative fuel vehicles.One of the biggest names for this credit has been Tesla cars.
An incentive for people to buy a new Tesla electric car will start to fade next year, after Tesla hit a U.S. sales milestone that triggered the progressive demise of a federal tax credit. Tesla, has revealed on its website that it had reached the 200,000 number mark that triggers the first cut to the $7,500 credit.
People buying a Model 3, Model S or Model X before the end of the year and receiving delivery will still receive the full credit (assuming they have a federal tax liability of $7,500 or more), according to a support page on Tesla’s site.
The credit will be cut in half, to $3,750, for Teslas purchased and received between January 1 and June 30 next year, according to Tesla. And that amount will be halved, to $1,875, for Teslas bought between July 1 and Dec. 31 next year. The tax credit is to disappear altogether for Teslas bought after 2019.
Tesla has reported that last month it reached its twice-missed target of producing 5,000 Model 3s a week. The sedan is intended to be the electric vehicle for the masses, if and when a lower-priced version becomes available. The company says it has received nearly a half million orders for the car and delivered thousands. It remains to be seen how many depositors will buy and receive their cars by year end, to receive the full $7,500 credit.
If purchasing a Tesla has been on your mind, now is the time to get off the fence and go purchase one to get the full tax credits!!!
If you would like to discuss how these changes affect your particular situation, and any planning moves you should consider in light of them, please give me a call at 602-482-9101 or email me at nitin.gupta@atlascpas.com.
About the Author
Nitin Gupta is a Partner and CPA at ATLAS CPAs and Advisors PLLC and licensed in California and Arizona as a Certified Public Accountant. With 28+ years of experience, Nitin has been a Tax Consultant with full expertise in federal, state, and local taxation for highly complex corporations, partnerships, individuals, estate, gift, and trust tax returns. He has extensive experience in all aspects of financial accounting in multiple industry segments such as real estate, construction, medical, manufacturing, wholesale, retail, professional services, information technology, and entertainment.
