Clarification on Tesla Tax Credit Qualification

by Giovanni

Yesterday we made a post outlining some theories on a potential backlash due to IRS qualifications for the Tesla tax credit. We reached out to Tesla for clarification and have cleared it all up.

After the IRS released a statement regarding the phase out of electric vehicle tax credits, many in the community were confused by the legal jargon, including us. Specifically what qualified as a pre December 31st delivery. We reached out to Tesla for clarification and got the following statement:

“A customer’s qualification of the federal EV credit is dependent on when they take delivery of the vehicle.

You can quote from a blog we wrote awhile back that explains the way the credit phases out: Customers must take delivery of their car by or on December 31st in order to receive the $7,500 credit.

According to the Department of Energy website:

“To claim the credit, fill out IRS Form 8936, Qualified Plug-in Electric Drive Motor Vehicle Credit. For vehicles acquired for personal use, report the credit from Form 8936 on the appropriate line of your Form 1040, U.S. Individual Income Tax Return. For vehicles purchased in 2010 or later, this credit can be used toward the alternative minimum tax (AMT). To learn more about the law, visit the IRS’s Plug-in Electric Drive Vehicle Credit webpage.” There’s also additional language on the IRS webpage that says the car needs to be “acquired” by the customer within this quarter.”

The quote referenced in the statement is as follows:

While the tax credit will exist in some form through the end of 2019, those who want the full $7,500 tax credit will need to take delivery of their vehicle by the end of this year. Please remember that your eligibility for income tax credits depends on your personal tax situation. We recommend speaking with a tax professional for guidance.

Basically, it is as Tesla and Musk originally stated. If you take delivery before December 31st, 2018, you’re in the clear. All other theories we shared from the community were just that, theories. We now have a full understanding and clarification from Tesla themselves.

For those that don’t know, Tesla has delivered over 200,000 cars in the U.S triggering their phaseout period. The $7,500 rebate expires at the end of this year. Afterwards, the rebate will be halved for two quarters, halved again for two more, until finally going to $0.

Federal Tax Credit Period
$7,500 On or before December 31, 2018
$3,750 January 1 to June 30, 2019
$1,875 July 1 to December 31, 2019

It is not too late to order a Tesla and have it delivered this year. There are plenty of inventory models and cancellations. All fleet models have also been released for sale to ensure the most customers can take advantage of the full $7,500 tax credit ending this year. Fleet vehicles being loaners, showroom models, and demos. Tesla has been building up inventory to ship to Europe in the coming months so finding a Tesla in your exact specifications already made shouldn’t be too difficult.

If you’re looking to purchase a Tesla, try not to wait too long. If your delivery period falls next year, your rebate will go down to $3,750 from the current $7,500. If you order a Tesla today, Tesla offers a full refund policy. If you didn’t test drive the car, you have 3 days to return it. If you did, you have 1. After December 31st, the rebate will be lowered to $3,750. It will be lowered to $1,850 on July 1st before being fully discontinued the following December 31st. Read up on their return policy here.

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