wait for new 3 or get discounted inventory 3

[Mayer]

People earning less can still claim the credit, but only up to their tax liability amount if it’s less than $7500. That’s a question for the government as to why it’s not a non-refundable credit for people with less tax burden.

But realistically for most people earning much below that amount, they are less likely able to comfortably afford a new car anyways, much less a Tesla or any EV which tends to be more expensive than a comparable ICE vehicle. I’m sure there’s some people that sacrifice other areas to make it work, but it’s not exactly the best financial decision.

Of course there’s outliers like retirees who have low income on paper but are living off savings and investments, etc. But someone otherwise working full time making less than $60k probably shouldn’t be buying $40k+ vehicles.

Fair enough.

 

[ks1972]

I read and understood it is defined as a credit. It’s surprising how many people think they are smarter than everyone else because they keep repeating the same thing. Pat yourself on the back for that 1972.

Pennsylvania, like other states, has a rebate and it is available to people earning under $50k.

It’s not that complicated.

It’s surprising the federal legislation was written to exclude young college graduates and other folks who earn less than $67k.

So rebate and credit is the same thing, okay.

I guess people writing legislation in US congress don’t expect people making 25k/year to buy electric vehicles. Or, do you want federal government to buy everyone an EV?

 

[3sr+buyer]

Also I keep hearing people say the M3 Highland is going to cost less. I don’t think there’s any evidence of that. It will cost Tesla less to make… but in most markets it’s more expensive than the M3. That’s a smart move by Tesla because it increases per unit profit margins.

The cost reduction will give Tesla the ability to reduce prices to a greater degree and still make a profit in the future, even if it does not reduce prices now. I.e. being ready in case an attractive competitor model appears, or the tax rebate reduction reduces demand.

 

[cdub]

So rebate and credit is the same thing, okay.

I guess people writing legislation in US congress don’t expect people making 25k/year to buy electric vehicles. Or, do you want federal government to buy everyone an EV?

I'd like EVs to be affordable to all

 

[3sr+buyer]

It’s tax credit, so you only be credited in full if you pay more than 7500 in taxes.

Technically, it would be a nonrefundable tax credit that is limited by the amount of the income taxes that the taxpayer would otherwise pay. There are some refundable tax credits that could result in a negative income tax (the best known example is the earned income tax credit).

As to why government subsidies are often given in the form of tax credits and deductions, there are some (political) reasons:

• They are less likely to be repealed later, because opponents of the repeal will say that the repeal "raises taxes" (in contrast to a subsidy that can be more easily described as "wasteful government spending" by those who want to repeal it).
• They direct a greater portion of the subsidy to the middle and upper middle class, who are more politically influential than the poor who get less benefit from income tax (nonrefundable) credits and deductions.

 

[ks1972]

I'd like EVs to be affordable to all

I would like everybody to be rich, able to afford college education, healthy and debt-free.

 

[ks1972]

I'd like EVs to be affordable to all

I would like everybody to be rich, able to afford college education, healthy and debt-free

Technically, it would be a nonrefundable tax credit that is limited by the amount of the income taxes that the taxpayer would otherwise pay. There are some refundable tax credits that could result in a negative income tax (the best known example is the earned income tax credit).

As to why government subsidies are often given in the form of tax credits and deductions, there are some (political) reasons:

• They are less likely to be repealed later, because opponents of the repeal will say that the repeal "raises taxes" (in contrast to a subsidy that can be more easily described as "wasteful government spending" by those who want to repeal it).
• They direct a greater portion of the subsidy to the middle and upper middle class, who are more politically influential than the poor who get less benefit from income tax (nonrefundable) credits and deductions.

i really don’t want government to have policies like EV tax credit, that money is better spent on reducing tax burden on low income people. It’s just bad policy overall, they could have reduced the lowest tax bracket to 5-7% from 10, that would have gotten bipartisan support too.

 

[Knightshade]

Second, why should someone earning $67k enjoy the tax credit but not someone who earns less than $57k?

Because it's a non-refundable credit. You can't get more back than 100% of what you owe.

i really don’t want government to have policies like EV tax credit, that money is better spent on reducing tax burden on low income people.

Low enough income people pay 0.00% in federal income tax already though. Anyone higher income than that can offset 100% of their federal tax burden, to a max of $7500, via the IRA tax credit.

 

[ucmndd]

Low enough income people pay 0.00% in federal income tax already though. Anyone higher income than that can offset 100% of their federal tax burden, to a max of $7500, via the IRA tax credit.

PLUS the benefit of incentivizing behaviors that benefit the country and common good / shared resources.

 

[Mayer]

I owe an apology to @ks1972 as it appears, despite reading it numerous times, I failed to comprehend that people earning less than $67,850 will still enjoy a credit against 100% of their federal tax liability.

I could not see past my own misconception that everyone pays at least 33% in taxes, erroneously believing that someone earning $25k is still paying over $7,500 in taxes.

I also now see that a fully refundable tax credit would create a “subsidy” to people who earn less than $67,850, and the more interesting point above by @3sr+buyer, if I correctly understood the point, that it arguably makes no difference from a broader perspective since it is a subsidy regardless of tax bracket (just semantics).

I was just frustrated that I cannot help my daughter capture the full $7,500 credit and did not understand that she will not pay a penny in federal taxes regardless, if she purchases an EV.

And to everyone’s point that it’s probably a bad idea for anyone earning less than $67k to purchase a M3 because payments will create a tremendous strain on their finances, there is also the issue of insuring the M3 for a younger driver.

And finally, there is the ethical consideration of the tax implication of helping/subsidizing the purchase for an adult child to get into a M3 at a price point where they can afford the monthly payment and enjoy the tax credit even if the credit is less than full.

I may need to consult my CPA.

One point is certain; my frustration was misdirected and @ks1972 was correct.

 

[dakhlkt22]

First, it ain’t a “50k new car.”
Inventory RWD came down to $36,220.

Second, why should someone earning $67k enjoy the tax credit but not someone who earns less than $57k?

How does that $10k discrepancy advance the state’s interest in lowering carbon footprints by putting more people into carbon neutral vehicles?

By “state”, I mean federal government.
And if it matters, I don’t qualify for the rebate because I earn too much.
And I have no problem with the ceiling.
It’s the floor (must earn at least $67k to secure $7,500 credit) I find problematic.

I agree the lower limit seems a bit odd for the same reasons. I suppose a case could be made that people would buy cars they can't afford with the tax credits. We all know what happened in 2009 when people were allowed to buy homes they couldn't afford, so perhaps that's how they justified a lower limit.

Also possible they intentionally segmented the market, figuring that people earning less than $57K would all have the $4K used EV tax credit available to them.

In addition, your modified adjusted gross income (AGI) may not exceed:

• $150,000 for married filing jointly or a surviving spouse
• $112,500 for heads of households
• $75,000 for all other filers

Used Clean Vehicle Credit | Internal Revenue Service

If you buy a qualified used electric vehicle from a dealer for $25,000 or less, you may be eligible for a clean vehicle tax credit of up to $4,000.

www.irs.gov

The only problem I have is that it will take quite a while for new EVs purchased with tax credits to depreciate to the point that a used EV tax credit can be used to buy them. There are plenty of used Bolts on the market that can be bought for under $25K, so at the moment it's not a problem, but I can imagine reaching a point where the inventory of under $25K EVs runs out in 2024 or 2025 but the fleet of EVs purchased with tax credits in 2023 have still not depreciated a $20K trade in value or less which would allow a $25K dealer sale price.

 

[Mayer]

I agree the lower limit seems a bit odd for the same reasons. I suppose a case could be made that people would buy cars they can't afford with the tax credits. We all know what happened in 2009 when people were allowed to buy homes they couldn't afford, so perhaps that's how they justified a lower limit.

Also possible they intentionally segmented the market, figuring that people earning less than $57K would all have the $4K used EV tax credit available to them.

Used Clean Vehicle Credit | Internal Revenue Service

If you buy a qualified used electric vehicle from a dealer for $25,000 or less, you may be eligible for a clean vehicle tax credit of up to $4,000.

www.irs.gov

The only problem I have is that it will take quite a while for new EVs purchased with tax credits to depreciate to the point that a used EV tax credit can be used to buy them. There are plenty of used Bolts on the market that can be bought for under $25K, so at the moment it's not a problem, but I can imagine reaching a point where the inventory of under $25K EVs runs out in 2024 or 2025 but the fleet of EVs purchased with tax credits in 2023 have still not depreciated a $20K trade in value or less which would allow a $25K dealer sale price.

Valid points regarding available dealer pre-owned EVs largely exceeding the $25k ceiling. I do wonder whether the Highland release will trigger trades of existing M3s that will “flood the market,” thereby reducing price points for 2018-2020 M3s to below $25k. Tesla seems to have plenty of pre-owned off-lease M3s in stock already.