Tax Credit for Plug-In Electric Vehicle Credit Begins Phase Down

Today, the IRS announced that Tesla, Inc. has sold more than 200,000 vehicles eligible for the plug-in electric drive motor vehicle credit during the third quarter of 2018.

This triggers a phase out of the tax credit available for purchasers of new Tesla plug-in electric vehicles beginning Jan. 1, 2019.

Qualifying vehicles by the manufacturer are eligible for a $7,500 credit if acquired before Jan. 1, 2019. Beginning Jan. 1, 2019, the credit will be $3,750 for Tesla’s eligible vehicles. On July 1, 2019, the credit will be reduced to $1,875 for the remainder of the year. After Dec. 31, 2019, no credit will be available.

The plug-in electric drive motor vehicle credit was enacted in the Energy Improvement and Extension Act of 2008 and subsequently modified in later law. It provides a credit for eligible passenger vehicles and light trucks. By law, five quarters after reaching the sales threshold, the credit ends for the manufacturer. Tesla Inc.’s vehicles are eligible for some portion of a credit until Jan. 1, 2020.

For questions on the electric vehicle tax credit, please contact Paul Glantz CPA at our Austin office at

Obamacare: Healthcare Solution or Taxpayer Burden?

On Monday, July 20, Orrin Hatch, Chairman of the Senate Finance Committee, called for an inspection of the Advanced Premium Tax Credit (APTC) program for 2014. The APTC is designed to forward tax credits as subsidies to individuals for health insurance on the exchange; with a reconciliation of these subsidies coming after year end when the individual files their tax return.

An inspection of this program found that over 710,000 recipients likely received over $2.4 Billion in advanced credit payments, and failed to submit tax returns or extensions of time to file after the deadline. The filing of a tax return is an important part of the program, as it ensures that individuals received the correct subsidy based on their income level, and pay any difference for subsidies received in advance.

In an undercover investigation, the federal exchange approved 11 out of the 12 fictitious applications it received over the phone and online. These undercover applications were submitted using falsified social security numbers or other fictitious information. The approval of these 11 applications cost the federal government (the taxpayer – you and I), $30,000 per year.

While many of the 710,000 recipients who did not file tax returns may have received warranted subsidies, the results of the undercover investigation performed by the Government Accountability Office (GAO) make me nervous about the accountability for government spending of our hard earned tax dollars.

Click here for a copy of the press release and more information on the findings of this investigation.

For questions on the Affordable Care Act (ACA) or any other tax related matters, contact Paul at