Lowest Tax Payers
Turns out taxes have been a touchy subject at Tesla for years. In its filing, Tesla says the tax credit is due to over allowances in past years. But Tesla also says, "We are currently under examination by the Internal Revenue Service ("IRS") for the years 2015 to 2018.
Tesla was at first excluded from the state's original tax credit program for EVs because the vehicle price was too high. The company then dropped the price on the models Y and S so they could be eligible.
You may qualify for a credit up to $7,500 under Internal Revenue Code Section 30D if you buy a new, qualified plug-in EV or fuel cell electric vehicle (FCV). The Inflation Reduction Act of 2022 changed the rules for this credit for vehicles purchased from 2023 to 2032.
Most of the government's federal income tax revenue comes from the nation's top income earners. In 2021, the top 5% of earners — people with incomes $252,840 and above — collectively paid over $1.4 trillion in income taxes, or about 66% of the national total.
The top 10% of earners bore responsibility for 76% of all income taxes paid, and the top 25% paid 89% of all income taxes. Altogether, the top 50% of filers earned 90% of all income and were responsible for 98% of all income taxes paid in 2021.
You generally don't have to pay taxes if your income is less than the standard deduction or the total of your itemized deductions, if you have a certain number of dependents, if you work abroad and are below the required thresholds, or if you're a qualifying non-profit organization.
Tesla's most recent report states that Tesla car batteries will last for over 200,000. Tesla car batteries are warrantied to last 8 years or up to 150,000 miles, depending on the model, whichever comes first.
And, if you file as head of household and make more than $225,000, you also won't be able to claim the electric vehicle tax credit. The EV credit income limit is $150,000 for all other filing statuses.
Many insurance providers classify Teslas as luxury vehicles, charging high premiums. According to Insurance.com, coverage for a Model Y costs about $2,599 per year, and insurance for a Model S costs around $4,318.
Beginning January 1, 2023, if you buy a qualified used electric vehicle (EV) from a licensed dealer for $25,000 or less, you may be eligible for a used clean vehicle tax credit. The credit equals 30% of the sale price up to a maximum credit of $4,000.
To claim the credit for a vehicle you took possession of in 2022, file Form 8936, Clean Vehicle Credits with your 2022 tax return. You will need to provide your vehicle's VIN.
Musk has a history of using the US tax code to pay little or no personal federal income taxes. A report from ProPublica shows that for 2018 Musk and many other Americans near the top of the world's richest people paid no income tax.
Families like the Waltons, Kochs, and Mars can avoid capital gains taxes forever by holding onto assets without selling, borrowing against their assets for income, and using the stepped-up basis loophole at inheritance. That loophole allows the increased value of assets to be passed to their heirs tax-free.
Tesla Model 3 RWD and LR AWD are officially no longer qualified for tax credit.
Tax credits up to $7,500 are available for eligible new electric vehicles and up to $4,000 for eligible used electric vehicles. You can claim the credit yourself or work with your dealership. Tax credits are available for home chargers and associated energy storage, each up to $1,000.
If you don't owe any money on your income taxes, the only way to take advantage of the federal EV tax credit on a car is to transfer it to the dealership you're buying from. It then can be applied as a discount on the purchase.
What is the price of a new EV? The price tag on new electric vehicles is still higher than gas-powered vehicles. Kelley Blue Book estimates that prices on new EVs dropped from $65,000 in May 2022 to $56,648 in May 2024, a 15% decline.
But if you want a rough idea of how Tesla batteries degrade, statistics can help. For instance, data collected by NimbleFins from owners shows that all models lose about 1% of range yearly. This means you should be able to charge the battery to 90% capacity after ten years.
Tesla will only replace your Tesla battery for free if you're still in your warranty period — which is typically eight years or up to a certain mileage limit, depending on the model. Your battery must also have a 70% retention of battery capacity to qualify.
A full charge for a Tesla vehicle model typically ranges from $13 to $18, depending on the model. Most Tesla owners find that charging their vehicle's battery is more economical than fueling a conventional gasoline-powered car, potentially reducing fuel costs by up to 50%.
The top 1% of earners typically pay much more in taxes than many other Americans. Nationwide, this group contributes 45% of total personal income taxes collected. However, the top 1% doesn't pay the same amount everywhere. Therefore, some states may be more dependent on this group than others for tax revenue.
The Law: There is no constitutional right to refuse to file an income tax return on the ground that it violates the Fifth Amendment privilege against self-incrimination.
Which Are the Tax-Free States? Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming are the only states that do not levy a state income tax. Note that Washington does levy a state capital gains tax on certain high earners.