AFAIK that credit is not going anywhere. Link please?

From 2010:

Up until a couple months ago, the plug-in tax rebates were only available for low speed battery vehicles. But the latest IRS bulletin titled "New Qualified Plug-in Electric Drive Motor Vehicle Credit" (based on Section 30D) makes money available for production cars, such as the Nissan Leaf, Tesla, etc. What's even better is that the buyer can rely on the manufacturer certification that a credit is available and how large that credit will be. There is a nasty gotcha involved, namely that the money is intended to accelerate the adoption of EV technology, it's not a permanent subsidy. So after the manufacturer sells 200,000 battery powered cars of a given model, the tax credit begins to phase out over the course of the next twelve months. DUring the first six months of the phase-out, the credit is reduced by 50% and during the last six months of the phase out, the credit is reduced by 75%.

As far as I can tell from the bulletin, the program commenced Jan 1/2010, and is limited to the first 200,000 of each "model". No date of expiry mentioned.

I thought that was common knowledge. It has been discussed in the media several times.

Don't get me wrong, I myself am thankful that the tax credit I'd there and I'm going to enjoy the savings.

However, good riddance when it's gone. It's stupid that those of us that can afford to by this fancy car are getting part of it paid for by all other taxpayers, the majority of whom will never be able to buy such a car. We're taking from everyone to help wealthy people buy cars we don't really need, and don't tell me Tesla would or would not be able to sell their $110k roadster or $50-90k Model S based on a $7500 discount.

Does the credit have any reduction based on income? Various deductions/credits often phase out as income brackets go up. I can't find anything that says one way or the other if this credit is similarly affected.

No, the only 'cap' is total quantity: 200,000 of each model qualify.

How many think this tax credit will still be available when the model x arrives in quantity early 2014?

I'm picking my Model X up in 2013, if Tesla meets schedule.

Yes you are bonnie. Arn't you in the top 10 of the sig reservations? However the presidential election is in 2012. Maybe my question should have been, how many think after the presidential election, the tax credit will still exist?

Well, it behaves exactly like the hybrid tax credits did. The phase-out started the first full quarter after the 200,000th qualifying vehicle from a given manufacturer is sold IN THE US. It goes down to 50% for the subsequent quarter, and then 25% the following quarter, and then it's gone for that automaker.

The hybrid tax credit criteria applied to the overall total of qualifying vehicles PER automaker that were sold in the United States.

For example, hybrid tax credits for Toyota models (Toyota and Infinity) phased out by 2007. The hybrid tax credit for Ford vehicles (Ford, Mercury and Lincoln) ran out in March of 2010. Others still have the full amount still available because they have yet to sell 200k qualifying vehicles under the hybrid category.

So, under the EV category, that means all 2,500 Roadsters, and all Model S and Model X sales (not reservations) will count toward 200k vehicle total sold in the US by Tesla Motor Co.

For Ford, that means all Focus EV sales, all C-Max Energi and Fusion Energi sales (all US sales) would count toward the 200k quota of Ford Motor Co. vehicles. I do not know if sales of their commercial EV, the Transit Connect EV, would count or not. I would assume so.

For Toyota, that would mean all Prius plug-in sales and RAV-4EV sales in the US. Etc., etc., etc.

So, given the expected low volume production of the Model S and Model X, Tesla should have the full 100% credit available for all models sold in the US in 2014 and beyond.

http://www.fueleconomy.gov/feg/taxcenter.shtml

Sorry, I meant, "all Roadsters sold in the US", not all 2,500 of them.

What will happen to the program?

I think Obama is finally getting smart in negotiating with some of these clowns in the US House. Making early concessions as a showing of good faith fell on deaf ears every time.

These shortsighted fools want to end it entirely; so, Obama now proposes that the credit should be bigger, and also be a point-of-sale rebate like the cash-for-clunkers program was. By the time the dust settles and a budget is passed, the EV credit program will, at worst, remain unchanged.

Assume, for the sake of argument, that the percentage of US sales of annual production for all models follows the Roadster sales proportions. For 20k Model S sold globally, what is that, about 12k to 13k sold in the US? That's 2013's contribution toward Tesla's 200k quota. Say they sell the same in 2014 and then sell 8k to 11k of the Model X in the US in 2014. So, from the beginning, Tesla Motors would be up to approx 1.5k Roadsters + 24k Model S + 9k Model X = 34,500 total qualifying vehicles sold in the US by the end of 2014 for Tesla Motors.

34,500 out of a quota of 200,000 total US sales. No worries here. Us GenIII buyers will be fine and dandy in 2015, as long as Tesla Motors is still viable by then (I assume so).

I double-checked the link in my previous post, and I was right, plug-in hybrids and EVs are counted together. So, it will be, for example, Ford Focus EV + Transit Connect EV + C-Max Energi + Fusion Energi cumulative US sales that will go toward Ford's 200k sales quota before phase-out begins.

Of course, Tesla doesn't have that problem, but I think it is significant to note. Competing automakers could blow through their quotas on almost exclusively plug-in hybrids, particularly when taking fleet sales into account. So any future pure EV offerings might not get anything, but TM models still will due to their low volume sales through 2014.

"(Toyota and Lexus)" - duh.....

FYI - The President's 2013 budget proposes increasing the maximum Federal tax credit for "Advanced Technology Vehicles" from $7,500 to $10,000. Ref: http://www.treasury.gov/resource-center/tax-policy/Documents/General-Exp... pages 32-33. The bad news is that it won't apply to vehicles with an MSRP over $45,000 (no subsidies for us rich guys buying Teslas); they remained capped at $7,500 but the proposal shifts eligibility for the credit from the purchaser to the person that sells or finances the sale of the vehicle, allowing the seller to offer a point-of-sale rebate to consumers. The good news for us, assuming TM lowers their base prices by $7,500, is less money up front and one less tax form to deal with. There are some other tidbits in the proposal too lengthy to repeat here.

A small question - is this available for those who itemize their deductions AND use standard deduction? Or do I HAVE to itemize in order to take advantage? Are there any conditions that come along (other than that this should not be for resale)?

Thanks,
Prash.

It's a tax credit vice a deduction, so it doesn't matter if you itemize or take the standard deduction. You compute the tax you owe and then subtract the allowable credit, currently up to $7,500 http://www.fueleconomy.gov/feg/taxevb.shtml. You do have to file on Form 1040 to claim the credit and fill out and attach a Form 8936: http://www.irs.gov/pub/irs-pdf/f8936.pdf I'm not a tax pro, but as far as I know, there is no upper limit on your adjusted gross income to be able to claim the credit.

This 7500 is a credit so it reduces your tax liability. This means that if you owe 500 you would get a refund of 7000. Once my car arrives I am going to reduce my federal with holdings so I can get the credit at time of delivery. There are many ways to skin a cat.

Thanks a lot Steven and Chad. I was hoping that this is the case and it is very good to finally get it confirmed.

:)

ChadMcGinn, you are incorrect. If your tax liability is $500, you will not be able to use this to get a $7000 check back. And, if you don't owe any taxes, you won't reap any benefit from the $7500.

http://www.autobytel.com/auto-news/features/2012-plug-in-hybrid-and-elec...

"6. It is important to note the tax credit will not, under any circumstances, exceed your tax liability. This means you can’t use the credit to generate a tax refund. In other words, if after preparing your taxes, you find you owe the government $7,500, and you bought a suitably qualifying vehicle in 2011, you’re in luck; your tax bill will be reduced to zero.

However, if you owe say, $2,500, that $2,500 will be the total amount of your tax credit and your tax bill will be reduced to zero. The government isn’t going to then turn around and refund you the other $5,000. Similarly, if you owe no taxes at all, you won’t get the electric car tax credit, nor will you be permitted to roll it, (or as in the scenario above, the $5,000 “balance”) into your potential 2012 tax liability.

However, if you’re a person who typically qualifies for a refund, there is a nice little loophole you could slip through. You could still technically take advantage of the $7,500 credit by leasing a fully qualifying electric or plug-in hybrid vehicle instead of buying it. Remember, most leasing companies automatically apply the credit toward the capital reduction payment required to establish the lease. This strategy enables you to get the benefit of the electric car tax credit, regardless of your potential tax liability"

Oh ... !!!

I was hoping that I would be able to get the $7,500 refund no matter what. I, normally, get a federal tax refund. If this is the case, then I will not see this tax credit.

Or, I have to claim more exemptions in my paycheck. This will decrease the tax amount that is taken out of my monthly pay, essentially guaranteeing that I will owe federal taxes at the end of the year. I have to make sure to claim enough exemptions so that that I owe more than $7,500.

And, in April, I can pay the difference in what I owe and $7,500.

This is better than getting the credit, as I don't have to wait till the end of the year to get the money. But, instead, will receive it in monthly chunks.

By the way, I am not sure how legal/ethical this is.

~ Prash.

I think you are still misunderstanding. When you do your tax return, you calculate how much money the IRS needs to get from you. Later, you subtract back off how much you've already paid, through deductions or periodic payments. Now, so long as that *first* number is bigger than $7500, you can take another $7500 off it. You don't need to still owe money at the end of the year.

If you can figure out the correct exemptions to claim, it's legal and ethical, just beware if you underpay you might end up being penalized.

Ggr,

Thanks a lot! Now I get it.

This means that, as long as the entire year's tax liability is greater than $7,500, I can claim the tax deduction. It doesn't matter how much taxes I have already paid by the end of the year. And this is certainly is the case for me.

I was under the impression that I can claim this deduction only if the difference is greater than $7,500. And this is not the case.

Good to know.

~ Prash.

And, if you know you are getting your model S THIS year, you can and probably should adjust your withholding to account for that fact. That is a pretty big reduction in Federal Income tax for most people. Note I am not a tax lawyer but it should have been part of your forward looking review of your income and deductions in Turbo Tax for instance.

jdiii