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From making a positive impact on the environment to skipping trips the gas station, electric vehicle ownership offers many benefits. Beyond the obvious benefits, another to consider is tax breaks. However, when it comes to taking advantage of these tax credits from Uncle Sam, the requirements to do so can be confusing. In this episode, I make it a little easier. I review how the tax credits work and some things to keep in mind when purchasing a Tesla or any other electric vehicle.
First and foremost, it’s important to understand that the tax breaks for purchasing an EV are tax credits, not discounts towards the purchase of your vehicle. It’s also important to understand how your income impacts your tax credit. Lastly, the number of units sold by vehicle manufacturers also play a role in electric vehicle owners’ tax credit eligibility amounts. Please note, these federal tax credits are available to US Tesla owners only.
Now, let’s talk dollar amounts. According to IRS.gov, “The total amount of the credit allowed for a vehicle is limited to $7,500.” and, in the US, “the credit begins to phase out for a manufacturer’s vehicles when at least 200,000 qualifying vehicles have been sold.” And, every two quarters, after the phase out begins, that $7500 is reduced by 50%. Also, super important to note, the credit does not take effect until you take ownership of the vehicle. So, when you reserve and bring your Tesla home will likely impact your tax break.
Considering all the above, if Tesla hits 200k units sold in October 2017, the credit will be $7500, and that will last through January 2018. From Q2 – Q3 of 2018, the credit reduces to $3,750. In October 2018 – March of 2019, the credit drops to $1,875. Based on these projections and considerations, come April 2019, there will be no available tax credit for purchasing a Tesla or any other electric vehicle.
While I’m obviously a Tesla advocate, there are other electric vehicles that are worth considering – these include the Chevy Bolt as well as the next generations of the Nissan Leaf and the BMW i5. In 2018, there will also be a flood of new options, including higher end EVs from Jaguar and Volkswagen.
Whatever electric vehicle option you choose, you’ll not only be saving with tax credits but by helping the planet and saving at the pump. And, when considering which electric vehicle to go with, be sure you have all the facts. I offer various Tesla data and findings on Tesla ownership costs, product information and more: https://teslanomics.co/yt. I also looked at an alternative EV, the Chevy Bolt. Check out my review on that electric vehicle: https://www.youtube.com/watch?v=aGCCpedOCZQ
I compiled all my findings and data for this video from the following sources:
To explore incentive programs outside the US, visit: https://en.wikipedia.org/wiki/Government_incentives_for_plug-in_electric_vehicles