Lifestyle

What Tax Incentives Are Available When Buying My Tesla?

Published

10 years ago

January 18, 2016

Rob M.

There are a number of tax incentives available when purchasing your Tesla depending on which model you choose and where you live. Here’s my overview of incentives available to US residents. Please note that I’m not a tax advisor, so be sure to do your own research and consult a tax professional.

Federal Tax Incentives

When I purchased my Tesla Model S back in 2014, I received a $7,500 Federal tax credit, an incentive that’s still available to new car buyers as of today (not available to CPO models). But what are the rules behind it and what does the credit mean to me?

According to the Internal Revenue Code Section 30D entitled “Plug-In Electric Drive Vehicle Credit”,

For vehicles acquired after December 31, 2009, the credit is equal to $2,500 plus, for a vehicle which draws propulsion energy from a battery with at least 5 kilowatt hours of capacity, $417, plus an additional $417 for each kilowatt hour of battery capacity in excess of 5 kilowatt hours. The total amount of the credit allowed for a vehicle is limited to $7,500.”

The smallest size battery for the Model S, at the time of this writing, is 70 kWh and will max out the federal credit at $7,500, not to be mistaken for a rebate or refund.

Too bad there’s a $7,500 cap! Just for fun, and assuming there weren’t a cap, a 70 kWh Model S would receive $417 for every kWh exceeding 5 kWh resulting in over $27,000 in tax credits! A 90 kWh Tesla would receive an additional $8,340 in credits making for a grand total of over $35,000 in tax credits.

These credits are issued by the Fed to incentivize adoption of clean energy vehicles and will go into a phase out period once 200,000 vehicles are manufactured by that automaker.

Qualified Plug-In Electric Drive Motor Vehicle Credit (IRC 30D) Phase Out
The qualified plug-in electric drive motor vehicle credit phases out for a manufacturer’s vehicles over the one-year period beginning with the second calendar quarter after the calendar quarter in which at least 200,000 qualifying vehicles manufactured by that manufacturer have been sold for use in the United States (determined on a cumulative basis for sales after December 31, 2009) (“phase-out period”). Qualifying vehicles manufactured by that manufacturer are eligible for 50 percent of the credit if acquired in the first two quarters of the phase-out period and 25 percent of the credit if acquired in the third or fourth quarter of the phase-out period.

With Tesla’s leading production and sales figures, it will be interesting to see what happens to Federal incentives once Tesla crosses the 200,000 vehicles manufactured threshold.

There are implications on which year the tax credit applies to based on when you took delivery of your vehicle. If you were one of the lucky people that took delivery of a Model X in 2015, be sure to have read the fine print on IRC 30D when you file your taxes.

State Incentives

In addition to the Federal tax credit, some states offer state rebates for qualifying battery electric vehicle (BEV) and plug-in hybrid electric vehicle (PHEV) purchases. The following states provide BEV incentives in the form of a refund for your qualifying purchase of a Tesla:

California – $2,500
Delaware – $2,200
Colorado – $6,000
Louisiana – $8,000
Massachusetts – $2,500
Maryland – $3,000
Pennsylvania – $2,000
Tennessee – $2,500
Utah – $1,500

Note that each one of these programs can have its own nuances. There are minimum ownership periods (3 years in Massachusetts), income caps ($500K for joint filers in CA) and other qualifying circumstances to consider. Before you count your money, check the rules for your specific state and make sure you qualify.

For example, when I purchased my Model S in 2014 the current MA state tax credit was no longer available. Since then it’s been put back in place. That was certainly bad timing on my part!

Business Deductions

The door sticker of Model X VIN #001, owned by Tesla CEO Elon Musk. Photo via Twitter, posted by @kalud.

You may have heard about a “$25,000 Hummer Tax Loophole” especially as it relates to the Model X, but what is that and does it apply to you?

Tax Section 179 allows businesses to take deductions for equipment and investments that are put into service. For vehicles, there’s a specific section that states cars used for 50% or more in your business can deduct up to $11,060, and slightly more for trucks.

SUVs or Crossover Vehicles with GVWR above 6,000 lbs. get an even larger deduction of $25,000. This is the “Hummer Tax Loophole” as the Hummer weighed in at somewhere around 6,500 pounds. GVWR is the weight of the vehicle with passengers and/or equipment. The Model X has a curb weight of 5,334 lbs. but it turns out that its GVWR is 6,768 pounds hence it qualifies for the Section 179 deduction.

That said, if you buy or lease a Model X and use it 50% or more for business you could deduct up to $25,000 in depreciation in the first year you acquire the vehicle versus depreciating it over time. The rationale is that businesses are incentivized to take the tax deductions up front there by allowing them to invest more into the business, earlier.

Note that the Section 179 deduction applies to both new and used vehicles, although I think we’ll see few used Model Xs in 2016.

Lifestyle

Tesla brings perhaps the coolest interior feature to cars in latest update

Tesla adds on to the “fun” aspect of its vehicles.

Published

4 weeks ago

July 30, 2025

Joey Klender

Credit: Tesla

Tesla has brought perhaps the coolest interior feature to its cars in a new update that is rolling out to vehicles now.

The feature will require a newer vehicle that has interior ambient lighting, which is present on the new Model S, Model X, Model 3 “Highland,” and Model Y “Juniper.” The Cybertruck also has ambient lighting strips throughout.

Tesla Model Y’s ambient lighting design changes revealed in leaked video

With the Version 2025.26+ Software Update, Tesla is rolling out a new “Sync Accent Lights w/ Music” feature, which is available on the Tesla Toybox:

Turn your Tesla into a rave cave with the new Light Sync feature 🎶
Rolling out now in software update 2025.26+ pic.twitter.com/IIsQxZ9jDP
Advertisement

— Tesla (@Tesla) July 29, 2025

To enable the feature, you’ll access the Toybox, choose “Light Sync,” and then choose “Sync Accent Lights w/ Music.”

Although it does not improve the performance of the vehicle, it is yet another example of Tesla making one of the coolest cars out there. This is truly a cool add-on that can be used to impress your friends and family.

Elon Musk

xAI, Musk Foundation helps schools near Memphis supercomputer site

Reports of xAI and the Musk Foundation’s work were recently posted by local news media.

Published

1 month ago

July 26, 2025

Simon Alvarez

xAI-supercomputer-memphis-environment-pushback

(Credit: xAI)

Elon Musk’s artificial intelligence startup xAI and the Musk Foundation have been supporting Memphis-Shelby County Schools with HVAC repairs and facility upgrades, while also funding youth programs for students in the area.

Reports of xAI and the Musk Foundation’s work were recently posted by local news media.

xAI’s school visits lead to facility repairs

Representatives from xAI visited John P. Freeman Optional School, Fairley High School, and Westwood High School, all of which are located near its Colossus supercomputer site, to assess HVAC systems, plumbing, gym facilities, and athletic fields. The visits resulted in a list of priority repairs, some of which were completed in April and May.

In addition to the repairs, xAI also shared a number of initiatives that are planned for students in the area, as stated in a Commercial Appeal report.

xAI is committed to cleaning the areas around schools and homes in Memphis. We work continuously with city and county officials to remove waste and improve the community. Today, our team was working hard to clean up the roadways. On average our crews remove 8-10 discarded… pic.twitter.com/PHwVVSFKrU— xAI Memphis (@xAIMemphis) July 18, 2025

“xAI is working on providing STEM workshops for local students, donating equipment to technical training programs, and supporting job fairs to boost employment opportunities. These initiatives reflect xAl’s commitment to fostering education and economic growth in Memphis,” xAI noted in a statement.

Musk Foundation donation

Apart from xAI, the Musk Foundation also donated $350,000 to the Boys & Girls Clubs of Greater Memphis, enabling the reopening of two club sites located at Booker T. Washington High School and Westwood High School. Both locations had closed earlier this year due to lapses in funding. As per xAI, the Musk Foundation’s donation allows clubs to reopen for almost 1,000 students.

The donation will fund staffing, supplies, and transportation, among others. “Kids are the future of humanity,” Elon Musk said in a statement, adding that students need “every chance to shoot for the stars.”

Musk Foundation provided a large donation to the Boys and Girls Club of Greater Memphis to fill in federal funding gap. https://t.co/6e2oJ3xZpB— Elon Musk (@elonmusk) July 26, 2025

“We’re honored to support the Boys & Girls Clubs of Greater Memphis in reopening these sites, giving kids in underserved communities the tools to build brighter futures,” Musk said.

The gift was praised by local officials, including Boys & Girls Clubs board chair Michael Garriga, who stated that the “commitment will ensure the youth of our community have the opportunities they need to develop their skills and talents to become successful students and future citizens.”

Lifestyle

EV fans urge Tesla to acquire Unplugged Performance for edge in fleet and security industry

Unplugged Performance has built a name for itself by producing performance upgrades for Tesla vehicles.

Published

2 months ago

July 12, 2025

Simon Alvarez

Credit: Unplugged Performance

A growing number of Tesla enthusiasts and longtime community voices are calling on the electric vehicle maker to acquire Unplugged Performance, a California-based aftermarket company best known for tuning Tesla vehicles and developing specialized government fleet solutions under its UP.FIT division.

The idea was once considered a niche proposal among EV fans, but it is now gaining serious attention not just as a performance play but as a strategic move to deepen Tesla’s roots in the fleet and security industry.

A strategic fit

Unplugged Performance has built a name for itself by producing performance upgrades for Tesla vehicles, from track-optimized components to visual and aerodynamic upgrades. But in recent years, its UP.FIT division has pivoted toward a more functional future by outfitting Tesla vehicles like Model Ys for police, military, and government use.

That work has sparked growing calls for closer collaboration with Tesla, especially as the EV maker increasingly leans into autonomy, AI, and fleet services as core components of its next chapter.

“I posted this four years ago, but I think it’s more true now than ever,” wrote Whole Mars Catalog, a well-known Tesla investor and FSD Beta tester, on X. “Tesla should buy Unplugged. But not just as a Performance division. What they are doing with UP.FIT unlocks large government and commercial fleet purchases that can improve utilization.”

I posted this four years ago, but I think it’s more true now than ever.

Tesla should buy Unplugged. But not just as a Performance division. What they are doing with UP FIT unlocks large gov & commercial fleet purchases that can improve utilization.

They also have some… https://t.co/z2x8NRdQpI pic.twitter.com/tUd08SzyHz— Whole Mars Catalog (@WholeMarsBlog) July 10, 2025

Tesla fans such as shareholder Sawyer Merritt echoed the sentiment, calling Unplugged a “great fit within Tesla.” adding, “They are literally located directly next to Tesla’s design studio in Hawthorne.”

Enabling the next wave

Supporters of the idea noted that integrating Unplugged into Tesla’s corporate structure could help accelerate the adoption of autonomous technologies in government sectors. With UP.FIT patrol cars already in use across some U.S. police departments, Tesla fans envisioned a future where self-driving Teslas could potentially revolutionize law enforcement, search-and-rescue, and public service logistics.

“Just imagine how autonomous patrol cars could transform policing and bring us into a safer future,” the veteran FSD tester wrote.

The benefits could also extend to Tesla’s existing consumer base. “They also have some incredible products in the works that I think will appeal to many ordinary Tesla drivers — not just those looking for performance or mods. Stuff that’s so good it should have come straight from the design studio next door,” Whole Mars Catalog noted.

Thank you. Our very existence is to support the Tesla mission with @UpfitTesla and @UnpluggedTesla. I appreciate your earlier 2021 post and today’s as well. We love working with Tesla and are grateful for the community’s support since 2013!— Ben Schaffer (@BenSchafferUP) July 10, 2025

Unplugged Performance, founded in 2013, shares not just a product vision with Tesla, but also geography. Its Hawthorne headquarters sits directly adjacent to Tesla’s design studio, and the two companies have maintained a close working relationship over the years. The aftermarket firm has long positioned itself as a “mission-aligned” partner to Tesla.

In response to the recent calls for acquisition, Unplugged Performance acknowledged the support from the community. “Our very existence is to support the Tesla mission with @UpfitTesla and @UnpluggedTesla,” Unplugged CEO Ben Schaffer posted on X. “We love working with Tesla and are grateful for the community’s support since 2013!”