In Washington, The IRS announced that Tesla, Inc. has sold more than 200,000 cars eligible for the plug-in electric drive motor vehicle credit during the Q3 of 2018. As a result a phase out of the tax credit available for customers of new Tesla plug-in electric vehicles beginning Jan.1, 2019.
Furthermore, qualifying vehicles by Tesla are eligible for a $7,500 credit if purchased before Jan. 1, 2019. Subsequently, beginning Jan. 1, 2019, the credit will be $3,750 for Tesla’s eligible cars. On July 1, 2019, the credit will be reduced to $1,875 for the remainder of the year. After Dec. 31, 2019, no credit will be available. Therefore, there is a tax incentive for consumers who purchase an electric drive motor vehicle within these periods. The credits are made to motivate people to shop more environment-friendly when looking for a car. If you are looking for ways to reduce your tax bill, this is a great one.
In addition, the plug-in electric drive motor vehicle credit was enacted in the Energy Improvement and Extension Act of 2008 and then modified in later law. It provides a credit for eligible passenger vehicles and light trucks. By law, five quarters after reaching the sales threshold, the credit ends for the manufacturer. They will no longer be able to use this as a sales component to persuade potential buyers. Tesla Inc.’s vehicles are eligible for some portion of a credit until Jan. 1, 2020.
Notice 2018-96 details the phase-out. More information on plug-in electric drive motor vehicle credit can be found on IRS.gov. The amounts of the credit for a specific vehicle can also be found at IRS.gov.