Featured Tesla Model 3 now costs as little as $23K in California thanks to tax credits

So you have to make $73,240 or less (for a couple) to get the $7,500 CA rebate?
But I don't see someone getting the full $7,500 federal tax credit at the same time. If the only deduction the couple had was the standard deduction then at best they'd owe $5,024.80 in taxes. Any other deductions or any income less than that and they'd own less.

Now a family of three could get owe just over $7,200 in taxes if they earned $92,120. Four or more could get both the CA rebate and the full federal tax credit.

 

For most folks who have 401k, it would be a great opportunity to do the Roth conversion and get your money back tax-free instead of paying to the fed. That's how I got my full l tax credit last year on my 22 Escape PHEV. Although $6843 tax credit was the max amount due to the size of the battery. If I do buy a BEV this year, I will do again just enough amount to convert to Roth to cover the full tax credit. That's the smartest way to invest. Put money in 401k to lower tax liability when there is not enough tax credit to cover, then convert to Roth when enough tax credit to claim it back. Once in the Roth, any gain on the account is tax-free income in your retirement.

 

Got it!
Step one, I'd need to find a job that offers a 401k...

 

I'm not an expert on this...but the yellow circled one (if you click for more info, says $4500 for FCEV and $2000 for BEV, $1000 for PHEV.
But the red circled one says $5500 for BEV/PHEV for low income. A few clicks down it has a whole table of income limits, basically $135K single and $200K married filing jointly. Are you saying this one is fake?

Mike

 

Yeah, when talking about income and tax credits, most programs only look at taxable income on 1040. There are a lot of creative ways to finance to reduce tax liability or increase tax liability to get the full non-refandable tax credit. I worked in the public and private non-profit sectors all my life. So my income was never great but probably falls in the mid to lower part of the middle-income class, average American. As a part of the last-wave boomers, I joined the workforce after most of the public and private sectors switched from failing defined benefit pension-plan type retirement funding to the defined contribution type 401k(though actually it is called 403b in non-profit sectors). I was lucky that all of my workplaces had employer contributions as a part of the benefits package. IRS does not consider those 403b contributions as income until I start taking out the money after retirement. Thus it is called tax-deferred. Roth on the other hand is tax-free. I use post-tax income to fund my retirement. The great thing is that my current plan allows any funds in my 403b converted to Roth even employer contributions. So, using a non-refundable tax credit like the EV credit to move funds from 403b to Roth was a no-brainer.

 

4 times the poverty level would be a difficult place to buy a new car from i suppose

 

What makes what difficult?

 

sorry, i rephrased it. see my edit

 

Yeah at the average new car cost of today which is around $48K. It would be difficult. But with incentives, that can be lowered, especially if the starting price is below average.

 

Tax credits are hard to get your hands around sometimes. Sounds like you have a good understanding of them as well as a way to access them.

For others - some automakers take the tax credits off the price of the vehicle if you lease it. If you find an Automaker who will do this - and then allow you to buy the car outright without a penalty - this might be a way for you to actually realize the benefit of the Tax Credit in a tangible way.

 

I have not looked into lease deals for a while, but I have read that there are some companies doing exactly what you have described, especially the companies that are now ineligible for the tax credit for individual purchases due to North American-built requirements. IRA has a loophole in that leased EVs are not required to satisfy this North America-built requirement. I wouldn't mind leasing an EV as long as the tax credit gets passed onto the customer. But all of this would change in 2024 when IRA starts the program to reduce the sales price by the tax credit at the point of sale. But nothing has been ironed out yet. I have no idea how it is going to work.

Another way to take advantage of tax credits on non-North America-built EVs is to buy them used from a dealer. It is a max $4K tax credit, but the caveat is that the sales price must be below $25K. Last I looked, any used BEVs priced below $25K are no bargain especially when you consider the remaining life on the battery and the short range those typical older BEVs offers.

 

LOL... $135K is low-income... maybe some in your own thread, which is now becoming a fighting ground for rich vs poor, may feel that way.
Have you read the thread lately?
Is Gen 5 Prius really better-looking than Gen 4 Prius Prime?

 

.... OR - start a home business, incorporate, and that entitles you to fund a (SEP) self-employed pension, basically the same benefits of a 401k

Yes - their electricity cost is astronomically high. That's why we put 8KW of solar on our roof which paid for itself in roughly 6 years - charging two cars and running our house.
After 6 years - our electricity was essentially free. Can't do that burning gas unless you have a refinery in your garage

.

 

Unfortunately, Tesla does not allow buying off lease.
If I were at the poverty level for two, 72k per year,
I wouldn’t risk trying to get all the Cali ev rebates, and doubt if I would qualify for the full federal

 

Don't know how the CA rebates work, but in my state, there are three levels. One for everyone for Any Income without any catch no application needed. You just sign a paper at the time of purchase. That is currently a $1K rebate on an EV. The second level is Moderate Income for a $3,500 EV rebate. This requires income verification on 1040 and an application to get approval. Individuals up to $70K or married joint filing for $100K income will qualify. Then, the Low-income level. This one requires special needs to be demonstrated and an application must be filed to the state. We actually have approval for this level due to our caring for a disabled adult daughter in our household. But, the approval period expires in Aug this year. So, if I don't use it, I will lose it. But I think I can re-apply again. Though no guarantee that we get it again.

If it was for me, I would pursue every possible venue to get the best incentives and lowest possible price. That being said, as tempting as the current price of the M3 is, I still don't think it is a bargain for me, that is even after knocking off a potential max of $15K from the sales price.

There are many hidden costs that will surface if I buy an M3...

1. The cost of installation of the L2 home charger will be very high. This is a biggy. The last estimate was ~$10k for upgrading the main panel and excavating the blacktop driveway to lay conduit underground 30 feet away from the home to the detached garage. I don't think Tesla has an L1 charging option.
   
2. The cost of insurance will likely to double. Will cost over $1k/yr
   
3. The annual excise tax will increase. Will likely cost ~$200-500/yr more
   
4. The cost of winter tires and wheels which I will need immediately upon purchase of a new car. Guestimate is over $2K for this setup.
   
5. The potential cost of service/repair will be higher, even if it is a warranty service. The nearest service center is two states away in MA, and they will not come all the way to where I live for the remote service. Unknow but it will be very expensive to service the car.
   
6. There will be no fuel cost saving for me. (our electricity cost is about even with gas)
7. After all, it is an over $40K car with tax even with the current discounted cash price of ~$38K. So with max incentive, it is still a $25K car which is more than any of the three PPs I have purchased in the last 5 years.

Yeah, if I can get M3 at $25k, then it is cheaper than the Escape PHEV I got last year, but Escape PHEV was meant to replace two cars (PP and Pathfinder SUV). If I need to buy another car for my commuting, then I will not be trading in our Escape PHEV. Besides, a BEV even M3 can not serve as the sole car in our household. So, as a secondary daily commuter, it is way too much to pay.

 

but it is cheaper than the g5.

i already have L2 for the pip.

i'd have to check insurance between the two, neither is likely to be cheap

excise will be higher on the higher value vehicle

electricity is higher than gas, but i've already crossed that bridge

service/repair is a concern for tesla, but not distance

i don't use winter tires, but i don't want the g5 tires anymore than the tesla's

i don't like the idea od either's monthly app fees, confusing as to what is needed, or mandated, don't want to get stuck with monthly fees.

nothing will be cheaper than keeping my pip, but i like talking about it.
i like that tesla is dropping prices and meeting demand, and hate that toyota is doing the opposite

 

Yep! That's why Gen5PP is no longer on my shortlist. No way, I am paying $30K+ for my daily driver. Maybe in a few years if Toyota sets up an assembly line to build PPs in NA, then it may become a contender again.

After all, for the last 5 new cars I have purchased and sold, the only one I had to pay money for was the 2015 Gen3 Two. The total cost of 4 Prius (2015 Gen3 Two, 2017 PP Premium, 2020 PP LE, 2021 PP Ltd) I purchased is an amazing $11,773.40 for four brand new cars kept for 87 months and driven ~90K miles. The cost of 4 new Prius was cheaper than two of the used cars (2008 HCH and 2014 Pathfinder Hybrid) I purchased for a total of $17,961 kept 121 months and driven ~105K miles.

BTW, I have sold the last PP for ~$32K and that was the price of the 22 Escape PHEV. So no money came out of my pocket. We also sold the Pathfinder for $14K. So, if I am to buy a new daily driver, then my budget is $14K purchasing costs. The only new BEV that can be purchased with this budget is Bolt EV.




In your location, if you can live with all-electron M3, it will be a good fit. Not sure how large the cabin and cargo are compared to Pip. I have never sat in one.

 

Sorry, maybe I just need new glasses. If I click on YOUR link and scroll down about 1/3 of the page I see this.



How does this not apply?

Mike

 

I looked at the link. As @Gokhan said and the image you posted shows, $135K is the Cap. If you make more than that, you are not eligible. And my understanding is that to qualify for the increased rebate of $7500, you have to show that your income is lower as stated in the same link.
Consumers with household incomes less than or equal to 400% of the federal poverty level are eligible for an increased rebate.
Household size Combined Household income must be less than*;
1 $54,360
2 $73,240
3 $92,120
4 $111,000
5 $129,880
6 $148,760
7 $167,640
8 $186,520
For households with more than 8 persons, add $18,880 for each additional person. *These values are equal to 400% of the 2022 Federal Poverty Level Guidelines

Otherwise, your rebate is limited to $2500. So, the article is not completely fake. But to get the max benefit of both low-income increased $7500 rebate from CA and a full tax credit of $7500 from the fed will take some creative financing to accomplish the max return quoted in the article. Most consumers will not likely to get both max CA and max Fed credits.

BTW, that amount is exactly what I can get in my state as well with again some creative financing. So, yeah, M3 is cheaper than before, but still not cheap enough for me. However, those who bought M3 with a huge markup last year would be kicking their butts for sure.