Well, Fred Lambert has stumbled across a very interesting possibility. We all know that there are a ton of ridiculous tax loopholes out there. We also tend to figure that they don’t benefit “the good guys,” but sometimes they can.
Fred has pointed out that what is informally referred to as the “Hummer Tax Loophole” could benefit buyers of the Tesla Model X. The loophole used to allow for tax deductions up to $500,000 when you bought heavy vehicles or equipment (that would presumably be used for some industrial activities). It now just allows for $25,000, but that’s still a notable chunk of money.
I imagine you’re now curious how this applies to a Model X. Fred explains it like this: “Under the Section 179, a SUV or Crossover, like the Model X, needs to have a gross vehicle weight rating (GVWR) of over 6,000 lbs to be eligible for the tax deduction. Tesla has yet to confirm the official GVWR of the Model X, but a little extrapolation from the specifications of the Model S, which is built on the same platform as the Model X, shows that Tesla’s new SUV could easily reach over 6,000 lbs.”
Fred gets into more details (check them out at the link above if interested), but here’s the snapshot story:
- GVWR for the Model S is 5,710 lbs
- Elon has stated that the Model X is ~10% heavier
- that makes the Model X GVWR 6,170 lbs (i.e., >6,000 lbs)
I’m not a tax specialist and can’t really say if this is the full story or if some critical detail is missing here, but the way it’s laid out, it looks like the Model X should be eligible.
Image by Andrew Butko (CC BY-SA 3.0)
Not really. Even if this works, big difference b/t a tax deduction and tax credit. The $25k tax deduction is worth $6250 if you are in the 25% tax bracket. Still a nice chunk of change.
Thanks. Corrected.
It’s worth more if you’re in a high bracket…. like most big companies. It would probably be worth a lot for a company fleet purchase.
Major flaw in this article. Can’t mix tax deductions and tax credits. Rightofthepeople’s comment is correct.
Yeah, removed, thanks.
For those who think the SUV tax credit is grotesque and hypocritical in the first place, look at it this way – the people who worship their gas-guzzling monsters like Ayn Rand loved cigarettes will now turn against their tax credit because a Tesla is getting it. (Suddenly it’s socialism!) And the net benefits to the environment from the credit being repealed might be large because so many marginal buyers will be pushed out of the full-size SUV market while the X has already gotten a long waiting list without it being confirmed.
haha