Time is Running Out for Consumers to Qualify for a Tesla Tax Credit by Rick D. Bazzani, CPA
Posted on February 12, 2019 by Rick Bazzani
Both GM and Tesla have sold in excess of 200,000 plug-in electric vehicles and have surpassed the limit to be eligible for the full federal tax credit.
If you are still considering the purchase of a Tesla or GM electric, plug-in vehicle, you may want to close the deal sooner than later to qualify for a potential tax credit that expires soon.
Under the Internal Revenue Code, consumers are eligible to receive a tax credit when they purchase or lease passenger cars or light trucks that qualify as plug-in electric-drive motor vehicles. However, by law, those credits begin to phase out when a manufacturer sells 200,000 qualifying vehicles in the United States. Both Tesla and GM surpassed that threshold during the last half of 2018. As a result, the tax credits that consumers may receive when they purchase or lease electric cars manufactured by Tesla or GM will phase out according to the following schedule:
|$7,500 Tax Credit||No Longer Available||Vehicles Purchased by March 31, 2019|
|$3,750 Tax Credit||Vehicles Purchased by June 30, 2019||Vehicles Purchased from April 1 to September 30, 2019|
|$1,875 Tax Credit||Vehicles Purchased from July 1 to December 31, 2019||Vehicles Purchased from October 1 to March 31, 2020|
|No Tax Credit||Vehicles purchased after December 31, 2019||Vehicles purchased after March 31, 2020|
It is important to note that as of Jan. 1, 2019, Tesla and General Motors are the only manufacturers whose sales of electric cars have reached the threshold limiting the tax credit. Consumers can continue to receive the full value of the plug-in car tax credit when they purchase electric vehicles manufactured by brands that include Audi, BMW, Ford, Honda, Porsche and Toyota, among others.
About the Author: Rick D. Bazzani, CPA, is a senior manager with Berkowitz Pollack Brant’s Tax Services practice, where he provides individuals with a broad range of tax-efficient estate-, trust- and gift-planning services. He can be reached at the CPA firm’s Ft. Lauderdale, Fla., office at (954) 712-7000, or via email at email@example.com.
Information contained in this article is subject to change based on further interpretation of tax laws and subsequent guidance issued by the Internal Revenue Service.