Cybertruck and Tax Credit Explained


Cybertruck and Tax Credit Explained

The Cybertruck is an exciting new vehicle from Tesla that aims to shake up the electric vehicle world. In the past, most electric vehicles came with an available tax credit to reduce the price and make the purchase more appealing. However, some things have changed at the federal level; is that still true for the Cybertruck?

As of 2021, there are no federal tax credits in the United States for electric vehicles, including the Cybertruck, but this may change very soon. Various states across the union include tax breaks and incentives, and there is a proposed plan to introduce different tax credit levels again soon. Credit for the Cybertruck may vary.

There are plenty of questions around how the Cybertruck may or may not receive a tax credit. It’s also essential to learn about local credits and incentives before deciding on a purchase. For a guide to both and more information, continue reading below.

What Tax Credits Will Be Available On The Cybertruck?

There are a few different types of tax credits for electric vehicles out there. Sadly, there are no federal options currently available. There is no tax credit universally available on the Cybertruck. While a disappointing reality, it does not have to mean the end of the road.

Between state-based tax credits and city-based offers, there likely still are ways for you to reduce the price of your future Cybertruck. Plus, there is a relatively long history of tax credits on electric vehicles in the United States; federal incentives may arrive again before the Cybertruck releases.

This seems especially likely when you look at the history of electric vehicle tax credits in the United States, and even when current deals are noticed. The future seems bright for the Cybertruck’s ability to get tax credits.

How Tesla Vehicle Tax Credits Have Worked

All Tesla vehicles benefited from tax credits until the final day of 2019. While this means we are approaching two years without them, there is good news here. Other electric vehicle manufacturers still receive tax credits, and a new plan is being worked on to bring back some tax credits to the federal level.

For reference, all Teslas – regardless of price, model, or trim package – received the following federal tax credits:

  • January 1st, 2010 – December 31st, 2018 – $7,500
  • January 1st, 2019 – June 30th, 2019 – $3,750
  • July 1st, 2019 – December 31st, 2019 – $1,875

The tax credit amount was the same for all manufacturers and followed the same decrease as it was phased out.

The decreases in tax credit amount were due to a phase-out period included in the signed government act. Currently, the EPA begins phasing out tax credits on vehicles in the second quarter after the manufacturer has sold 200,000 eligible electric vehicles.

While it is good for the company to see that much success, Tesla passing the 200,000 vehicle mark means no tax incentives from the federal level.

Will Federal Tax Credit Be Reintroduced?

It seems likely that federal tax credit on all-electric vehicles will emerge again. The U.S. Senate recently pushed forward a plan to introduce tax credits of up to $12,500 for electric vehicles made in the United States.

While Tesla vehicles like the Cybertruck are unlikely to be eligible for the full credit – namely thanks to some union rules – it will still be a welcome change at the federal level.

The plan is bound to see some changes as it gets voted on, but new options for electric vehicle incentives are almost guaranteed. With the production of the Cybertruck starting in late 2022, it may even be ready to go by then.

State Tax Credits On Electric Vehicles

With no federal tax credit available on electric vehicles, it is crucial to turn to states and local areas for additional help. Almost every state across the country includes some kind of benefit for those looking toward the future. Luckily, these are – generally speaking – brand agnostic. 

This means that any state tax credits you get will almost certainly apply to the Cybertruck. The most significant limiting factor is often price. Different areas cap tax credits at different purchase points, some of which may be lower than the price of the new Cybertruck.

You can check out the different builds and prices for the Cybertruck here. Keep in mind that these may change closer to release (production expected in late 2022), but they should serve as good general guidelines. As with any car, the higher-quality and more powerful models cost more money.

Motor Number Matters

Specifically, Cybertrucks can come equipped with Single Motor RWD, Dual Motor AWD, or Tri Motor AWD. Prices range from roughly $40,000 for the Single Motor model to just shy of $70,000 for the Tri Motor powerhouse.

Depending on your state, you may be eligible for a tax credit on a Single Motor model but not a Tri Motor due to the price difference. One such example is Massachusetts; their rebate on electric vehicles caps out at a $50,000 purchase price.

To make locating information about your state easier, Tesla keeps a list of all available rebates, credits, and offers on their website. There are too many states and cities with options to list here, but you will want to know some terminology before continuing.

The Different Types of Incentives Available For The Cybertruck

There are a few different common types of incentives available for electric vehicles. Because the state level is more open to changes, you are likely to come across different ones while searching for your applicable case. The same is true for local incentives, which are often city or county-based.

Some different common types of incentives are:

  • Tax credits
  • Rebates
  • Exemptions
  • Reduced fees
  • Increased access

By far, the two most common ones are tax credits and rebates, but you will likely run across some others. While the terms are often incorrectly used interchangeably, there are some key differences. 

Tax credits only apply when taxes are owed. Or, put simply, you have to owe more than the amount of credit you are getting to receive the total amount. For instance, if you owe $3,000 in taxes to a state and they offer a $1,000 tax credit, you now owe $2,000. You get the whole tax credit “back” by not needing to pay for it.

On the other hand, if you owe $2,000 in taxes and have a $3,000 rebate, you now owe zero dollars. However, in this scenario, you “lose” the remaining $1,000 in the rebate because there is nothing more to apply it to. The credit does not carry over to next year’s taxes, and it cannot be retroactively applied.

Rebates can change between dealerships and states, but they are unique from tax credits. Rebates are applied regardless of your tax situation and often immediately. If you receive a $1,000 rebate, you do not need to worry about how much you owe in taxes; the money is yours either way. In this regard, they are a nicer alternative to tax credits.

The rest of the incentives available on electric cars are relatively self-explanatory. Some states include exemptions from certain tests during car inspections, while others reduce fees for tolls or allow expanded access to quality of life driving features. These are unique and can change drastically between areas.


Rather than relying on these extra perks, it is better to view them as nice bonuses. Rebates and tax credits should be your focus.

Recap

There are currently no federal tax credits available on the Cybertruck because Tesla has outgrown the 200,000 vehicle limit. State and local tax credits, rebates, and other incentives are still kicking around and even growing, however. It is a worthwhile task to look around and see what your state or city has to offer.

Federally, the U.S. Senate recently advanced plans for a new electric vehicle tax credit that will affect the Cybertruck. There are a few different levels to the plan, but the Cybertruck should fit into a few of them. If everything goes well, it may be enacted before the Cybertruck releases.

Greg

Hi, I'm Greg. My daily driver is a Tesla Model 3 Performance. I've learned a ton about Teslas from hands-on experience and this is the site where I share everything I've learned.

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