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Potential New EV Tax Credit for 2021

OUengineer

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Dec 10, 2019
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glide

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Jun 6, 2018
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Tesla to get access to $7,000 tax credit on 400,000 more electric cars in the US with new incentive reform - Electrek

This is pretty huge. If I can get $7k off a Model 3 Performance at current prices, I'm not sure there will be any reason to even test drive any of the ICE cars on my list. I feel like this could almost be game over for the other sports sedans out there. Might hurt Tesla sales in the short term tho. Thoughts?
Do you make less than $40K a year?

If not, you aren’t getting any credit. And that’s if this passes to begin with.
 

Sam1

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Sep 11, 2019
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Do you make less than $40K a year?

If not, you aren’t getting any credit. And that’s if this passes to begin with.

do you have any supporting documentation on this? Not saying it's untrue, but that seems like a strange arbitrary number since it doesn't match up with any of the existing tax brackets.
 

novox77

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Nov 25, 2017
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Tax credits offset your tax liability. If you owe the IRS more than $7000, and you meet the criteria for your EV purchase, you'll get the full credit. The tax liability also includes any salary withheld by your company (which is just your tax liability paid earlier in the year).

Because this is a non-refundable tax credit, if your tax liability is less than $7000, the tax credit will zero out your liability, but the remainder is lost. You can't carry it over to the next year.
 
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glide

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do you have any supporting documentation on this? Not saying it's untrue, but that seems like a strange arbitrary number since it doesn't match up with any of the existing tax brackets.
Did you read the actual proposal? Or just skim the headline?
 

stopcrazypp

Well-Known Member
Dec 8, 2007
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Do you make less than $40K a year?

If not, you aren’t getting any credit. And that’s if this passes to begin with.
Income limits only apply to the used car provision of the law in section 402 (which does not have volume limits). The new car portion (section 401) is the same as previous, there is no income limit. The only change is it extends things to 600k units while excluding volume in the period in between where this new law didn't exist yet for manufacturers who already reached past 200k units (like Tesla):
Sec. 401. Modification of limitations on new qualified plug-in electric drive motor vehicle credit (§30D). The provision expands the qualified plug-in electric drive motor vehicle credit under Section 30D to apply a new transition period for vehicle sales of a manufacturer between 200,000 and 600,000 electric vehicles (EVs), under which the credit is reduced by $500. The provision replaces the current phaseout period (which begins at 200,000 vehicles) with a phaseout period that instead begins during the second calendar quarter after the 600,000-vehicle threshold is reached. At the start of the new phaseout period, the credit is reduced by 50% for one quarter and terminates thereafter. For manufacturers that pass the 200,000-vehicle threshold before the enactment of this bill, the number of vehicles sold in between 200,000 and those sold on the date of enactment are excluded to determine when the 600,000-vehicle threshold is reached. The provision extends the 2-wheeled plug-in electric vehicle credit through 2026. It also extends the 3-wheeled plug-in electric vehicle credit through 2026.

Used car provision, which is new and completely different:
Sec. 402. Credit for previously-owned qualified plug-in electric drive motor vehicles (§25E). The provision creates a new refundable credit for buyers of used plug-in electric cars from date of enactment through 2026. Buyers can claim a base credit of $1,250 for the purchase of qualifying used EVs, with additional incentives for battery capacity. The credit is capped at the lesser of $2,500 credit or 30% of the sale price. To qualify for this credit, used EVs must generally meet the eligibility requirements in the existing Section 30D credit for new EVs, not exceed a sale price of $25,000, and be a model year that is at least two years earlier than the date of sale. Buyers with up to $30,000 ($60,000 for married couples filing jointly) in adjusted gross income can claim the full amount of the credit. The credit phases out so that buyers with below $40,000 ($70,000 for married couples filing a joint return) in AGI may be eligible for a reduced credit. Buyers must purchase the vehicle from a dealership for personal use and cannot claim the credit more than once every three years. The credit only applies to the first resale of a used EV and includes restrictions on sales between related parties.

Discussed extensively already in another thread.
Federal Tax Credit may be coming back for Tesla purchases

Link to summary (page 4 describes it):
https://mikethompson.house.gov/sites/mikethompson.house.gov/files/GREEN Act 2021 sxs.pdf
Seriously, people perhaps need to look directly at the source and ignore the reporting, which often gets things wrong (even though it seems so clear cut in the source).

A lot of people had been confused about this difference. As another put it, logically an income limit would not be compatible with the per manufacturer volume limit, given it would make it impossible to determine how many cars already used the volume until the given income taxes were filed for the year already. Under the phase out provisions, the volume is supposed to be determined every quarter, so that definitely would not work. That's why the new car part has no income limits and the used car part has no volume limits.
 
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ItsNotAboutTheMoney

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Jul 12, 2012
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do you have any supporting documentation on this? Not saying it's untrue, but that seems like a strange arbitrary number since it doesn't match up with any of the existing tax brackets.

You can search for the bill:
- New vehicle limit raised to 600,00, and ignores sales after expiration, so Tesla would have a window.
--Adds a used PEV credit for lower income households.
The number is chosen, I believe to cover the bottom 50% of households.
 

Mengy

Member
Feb 18, 2020
405
2,888
PA
I was planning on buying my Model Y sometime in mid 2022.

However, if this new GREEN Act goes into effect and Tesla's qualify again for a $7000 tax rebate, I might be tempted to buy a MY sooner. That 400K window won't last more than a year or so with Tesla's US production levels.

Very interesting.
 

TespaceX

Member
May 1, 2020
469
711
CA
While everyone’s talking about getting a $7,000 cheaper car. Though somewhat unlikely, it’s possible that Tesla increases prices a little if such a tax credit gets passed. I mean they just basically raised the base price of the S/X with the aesthetic refresh.
 

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