Congrats on the new Tesla! Excellent choice for a sleek, electric crossover with an awesome range.
Writing off your Tesla on your taxes depends on the percent of the time it’s used for business, how necessary the Tesla is for your line of work, and the gross vehicle weight. It also depends on the specific rules for your state. Depending on the profit for your business, you can write off the entire cost of the vehicle, a portion, or spread it out over five years.
Many Tesla owners wonder how Biden’s Build Back Better bill can help them out. Here’s what we know about doing your taxes as a Tesla owner:
The tax incentive encourages Americans to buy an electric vehicle by offering anywhere from $2,500 to $7,500 for EVs and PHEVs. In order to claim the credit, you must file Form 8936 and have a federal tax liability for the year you purchased the new car.
However, once a carmaker sells 200,000 vehicles that qualify, the federal incentive credit is phased out by being cut in half. This downgrade continues until the credit reaches zero dollars a full year later.
- Unfortunately, Tesla is no longer eligible for the $7,500 electric vehicle federal tax credit, as it hit its 200,000 units sold milestone in 2018. After Jan. 1, 2020 the credit was phased out to zero.
- But don’t fret! The House Ways and Means Committee has been reworking the Build Back Better bill since 2021 that would include additional benefits for EV owners. It would also cost $3.5 trillion dollars.
- If passed, the EV credit would increase to $12,500 and consumers may also be eligible for an additional $5,000 if the EV was made by a union workforce in the U.S. and if at least half of the parts were made in America.
- As of yet, the House of Representatives (HOR) has passed the bill, but it still needs to be approved by the Senate to get the go-ahead.
If you purchased your Tesla after Dec. 31, 2021, you could qualify for an $8,000 tax credit from the HOR version or $10,000 for the Senate version. However, in both versions, Models S, X, and 3 Performance would not qualify. Also, since Tesla workers are not unionized, the credit for that isn’t valid either.
Now that you know your Tesla Model Y could possibly qualify for upcoming tax incentives, keep an eye on the news for any recent updates. It’s also important to stay on top of your car insurance coverage, as most of us are overpaying way too much each month!
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