Remember the HUMMER Tax Break? Your Tesla Model X Qualifies For It Too

Considered a shameful tax loophole by some and a way to support small independent businesses by others, Section 179 of the U.S. federal tax code has for a long time allowed business owners the opportunity to write off a substantial portion of the purchase costs of a full-size SUV or pickup truck against their tax bill.

Known colloquially as the HUMMER tax break due to the large number of full-size HUMMER SUVs and pickup trucks purchased by small business owners back when the total write off was $500,000, the current Section 179 allows business owners to purchase a new pickup or SUV with a gross vehicle weight of at least 6,000 pounds but not more than 14,000 pounds then write off up to $25,000 of the purchase price against their tax bill.

Large pickup trucks have been eligible for some time for a write-off against a business' Federal Taxes.

Large pickup trucks have been eligible for some time for a write-off against a business’ Federal Taxes.

Traditionally, the only vehicles heavy enough to qualify have been high power, low efficiency gas-guzzlers, but as Tesla Motors confirmed to our friends over at Autobloggreen last week, the all-new Tesla Model X SUV happens to be big enough and heavy enough to qualify for the exact same tax break as full-size SUVs which get less than 15 miles to the gallon.

On paper, the Model X has a curb weight of 5,441 pounds, but as a photograph taken at last month’s Model X launch event of Tesla Motors CEO Elon Musk’s personal Model X shows, the Gross Vehicle Weight is nearer to 6,768 pounds, more than enough to get the Model X into the required weight range to qualify for the tax break.

In response to further probing from Autobloggreen, Tesla spokeswoman Alexis Georgeson confirmed that “Yes, the curb weight of Model X is 5,441 lbs. So we expect the GVWR to exceed 6,000 lbs. This means a Section 179 deduction could be taken for to up to $25,000 of the purchase price.”

We should probably remind you at this point that the Model X, just like any other car purchased with Section 179 in mind, must be purchased for business use and registered to the business in question. While that may not be a problem for some, it does mean that only those who legitimately own and operate their own business can even think of wiping the aforementioned $25,000 off the purchase price.

Own a business and you too can write off $25,000 off the cost of buying a Model X.

Own a business and you too can write off $25,000 off the cost of buying a Model X.

There’s also the matter of total taxable income. If your company doesn’t have a tax bill anywhere near the $25,000 maximum deductible under Section 179, there’s little benefit to be had because you can’t claim a rebate that’s more than your tax bill.

Compared to the usual Ford F-series pickup trucks, Cadillac Escalades and Chevy Suburbans which form the mainstay of Section 179 writeoffs, the Tesla Model X is certainly a whole lot more environmentally responsible — and a lot cheaper to fuel thanks to Tesla’s nationwide network of Supercharger stations.

But while we can see a slew of doctors, accountants and perhaps even white-collar management using Section 179 as a way to reduce the effective price of a Model X downwards by $25,000, we’re not sure a whole lot of self-employed tradespeople will want to spoil the Model X’s beautiful interior with heavy toolboxes, materials or indeed the occasional off-roading trip to a remote site.

Of course, you'll need to be a small business owner in order to qualify.

Of course, you’ll need to be a small business owner in order to qualify.

For those, we’re guessing they’ll have to wait until Tesla produces a Pickup before taking advantage of Section 179 — or perhaps look at the one other plug-in vehicle on the market today which classifies for Section 179 deductions: the Via Motors VTrux.

Don’t own a small business? Like other plug-in cars, the Model X will likely be eligible for the $7,500 Federal Income Tax credit, as well as whatever tax credits and rebates exist in your local state and city.

Neither the author nor Transport Evolved LLC are qualified tax advisors and the information discussed above should not be taken as such. Always consult a licensed tax advisor in your local state before making any financial commitments that could impact your income tax bill. 

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  • Dennis Pascual

    I wonder if Solar City’s Chairman might want to direct its installers to consider purchasing some Model X for the firm’s fleet.

    Then again, “small business….” I wonder.

  • Hello Nikki,

    There is widespread misinterpretation of what this actually means. According two accounts and one tax attorney I’ve talked with, the benefit of “Hummer loophole” for Model X buyers will be marginal at best.

    It’s not a $25,000 “discount” as many commenters seem to think. A better way to describe Section 179 is “accelerated depreciation.” And asset depreciation merely lowers your taxable income. Deductions are not the same as rebates or the $7,500 Federal Income Tax credit.

    So, these statements are not accurate: “wiping the aforementioned $25,000 off the purchase price. If your company doesn’t have a tax bill anywhere near the $25,000 maximum deductible under Section 179, there’s little benefit to be had because you can’t claim a rebate that’s more than your tax bill.”

    Here is what Barry Brents, a tax attorney and expert on EV incentives, told us:

    “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. 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.”

    https://chargedevs.com/newswire/tesla-model-x-will-probably-qualify-for-the-hummer-tax-loophole-what-does-that-mean/

    • KIMS

      Perhaps a short “update” in italics at the top of the article to clarify/correct would be prudent? (Time permitting, not a huge deal.)

  • Gordon Laplante

    there might be some small fleet action from a suv but as an oilfield welder myself if there was a comparable f350 electric option or even a 150 option the massive fleet of white pickups in fort mac would be world changing as a electric vehicle could be more intrinsicly safe than a motor in the gas plants . remember those big honkin trucks already cost upwards of 90k in cases and not havin to get a permit sniffer boy to move it when my cables are 10 feet too short would be priceless. revolution from the inside. that’s the key.