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Tesla Model X will probably qualify for the Hummer Tax Loophole. What does that mean?

tesla model x signature series 1

Oh the irony! Could something called the Hummer Tax Loophole end up supercharging sales of Tesla’s new Model X?

Section 179 of the federal tax code allows taxpayers to immediately deduct the cost of certain assets, including “heavy vehicles and equipment,” instead of depreciating them over time. Electrek reports that this became known as the Hummer Tax Loophole, because a number of businesses took advantage of it to buy hulking Hummers.

The party petered out when the IRS reduced the maximum amount of the deduction from $500,000 to $25,000, though there is an active lobbying effort to restore the loophole to its former glory.

Under Section 179, an SUV with a gross vehicle weight rating (GVWR) of over 6,000 pounds is eligible for the tax goodie. Although Tesla hasn’t confirmed exactly what the Model X will weigh, it could easily be over 6,000 pounds.

Could a business upgrade to a fleet of Model X, and get a tasty tax treat, too? Barry Brents, a tax attorney and expert on EV incentives, burst our bubble.

“The 2015 overall cap on section 179 deductions is so low ($25,000 with a $200,000 cost limit) that the benefit would probably only be a little better than regular depreciation deductions for most businesses,” Brents told Charged. “Unfortunately, businesses couldn’t claim section 179 deductions for a fleet of new Teslas, since the already low $25,000 cap gets reduced dollar for dollar to the extent that the total cost of 179 property exceeds $200,000.”

There is hope for those who love loopholes, however. The large-vehicle-loving lobbyists are still at work trying to increase the limits.


Source: ElectrekPlugIncentives.com


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