Attention entrepreneurs: it might be in your best interests to own a $100,000 Tesla. If nothing else, you could enjoy some amazing tax benefits for making this major purchase. According to an article in the LA Times, a small business owner with substantial federal tax obligations can order Tesla’s new Model x and collect up to $35,000 in tax and government rebate benefits.
How can that be? Because Elon Musk, the mastermind behind the incomparable luxury car, discovered a tax loophole for customers who purchase his company’s new Model X electric SUV whose sticker price is north of $100,000. That federal tax incentive is $25,000, in addition to another $7,500 federal tax credit. California buyers also enjoy a $2,500 rebate for buying a battery-electric car.
That loophole is part of section 179 of the IRS tax code, which was originally part of the stimulus package meant to encourage entrepreneurs to spend money more freely on heavy equipment. For example, it urged farmers to purchase new tractors and contractors to buy new trucks.
The IRS section is aimed at purchases of vehicles weighing more than 6,000 pounds, thereby excluding passenger cars and light trucks. Because of that, the tax deduction earned the moniker of “Hummer tax loophole” because it extends tax deductions to purchasers of oversized, gas-guzzling Hummer H1 and H2 military-grade trucks. Although General Motors no longer manufactures those vehicles, the nickname has attached itself to the Model X. That SUV is expected to have a gross vehicular weight of more than 6,000 pounds.
People in the market for Tesla’s ultra-luxurious Model X should know the $25,000 tax break is not tantamount to cash in hand. It’s advisable to seek the advice of a qualified tax expert for a complete picture of any financial benefits of purchasing the Model X.
In other Tesla-related news, the company recently announced it delivered 11,603 vehicles in the third quarter. That number is slightly higher than the 11,580 Tesla has forecast it would deliver in October.
Tami Kamin Meyer is an Ohio attorney and freelance writer.