by LawInc Staff
November 22, 2023
Tesla’s long-awaited Cybertruck is positioned to disrupt far more than the pickup truck market when production models hit roads. For small business owners strategically acquiring the Cybertruck, it can deliver significant tax savings through a lucrative but little known IRS tax perk referred to as the Section 179 deduction.
Cybertrucks are on their way to Tesla stores in North America!https://t.co/deuRQr72DI
— Elon Musk (@elonmusk) November 22, 2023
Now that reports are confirming the Cybertruck’s weight exceeds 6,000 lbs, businesses that purchase it can immediately deduct the full price as a tax write-off under IRC Section 179. By pairing this deduction opportunity with setting up the business as an S corporation, individuals stand to save tens of thousands in taxes while owning one of the most eagerly anticipated vehicles ever unveiled.
Tesla Cybertruck specs revealed! A display at a San Diego Tesla store shows official payload and towing capacity for the stainless steel electric truck. https://t.co/hYkba3MgnP
— motortrend (@MotorTrend) November 22, 2023
Electrifying Tax Perks of the Tesla Cybertruck
- Weight Revealed: Tesla’s announcement confirms the Cybertruck’s max payload capacity is 3,500 lbs, ensuring it exceeds the 6,000 lb threshold for Section 179 vehicle deduction advantages.
- First Deliveries Imminent: With orders opening soon, small businesses can quickly capitalize on electric vehicle tax credits and business tax savings as soon as the Cybertruck hits the roads.
- Functional Innovation: Cutting edge autotpilot tech, 500 mile range, rugged adaptive air suspension ideal for business use.
How Section 179 Tax Incentive Works
- Immediate Write-Off: The Section 179 vehicle deduction under IRC Section 179 allows businesses to deduct the full price of qualifying vehicles like the Cybertruck in the year of service.
- 6,000 lb Qualification: Part of the total $1,080,000 Section 179 deduction limit can be applied to qualifying vehicles like the Cybertruck.
- S Corp Advantages: Especially beneficial when combined with pass-through taxation structure.
Form an S-Corporation for Maximum Advantage
- Pass-Through Structure: S corp designation allows passing income/deductions to shareholders’ returns.
- Avoids Double Tax: Shareholders pay only personal income tax on S corp gains/losses.
- Tax Reporting Streamlined: Income and 179 deduction combined on one return.
Combined Tax Savings for Businesses
- Section 179 Deduction Value: Businesses can potentially write off up to $70,000 in the year the vehicle is acquired, leveraging the Section 179 deduction.
- Federal EV Tax Credit: The Cybertruck may qualify for electric vehicle tax credits, including a federal tax credit of up to $7,500, subject to specific eligibility criteria including vehicle price caps. Note: Eligibility for the federal EV tax credit is subject to change and may vary based on the Cybertruck model. Consult a tax professional for the latest information.
- State Incentives: Additional savings can be realized through state incentives like California’s EV rebate, where applicable and subject to their own criteria.
Leveraging Cybertruck’s Advanced Capabilities
The Cybertruck promises to be one of Tesla’s most technologically advanced vehicles ever produced, with specs and capabilities tailor-made for business, construction and outdoor use cases.
With Tesla’s self-driving Autopilot package standard, entrepreneurs can focus on tasks instead of driving during long commutes and roadtrips to client sites or regional offices.
$TSLA Cybertruck in Chicago store on Rush Street. Arrived this morning. Nothing else compares. This can provide massive halo effect to $TSLA sales in 2024. @MartinViecha @elonmusk pic.twitter.com/aPYvHnnBLu
— Gary Black (@garyblack00) November 22, 2023
The adaptive air suspension adjustable up to 16 inches enables taking the Cybertruck offroad like a 4×4 while still delivering a smooth ride. This opens up access on construction sites with uneven terrain or driving to remote outdoor locations.
Given these features specially geared toward commercial applications, the Cybertruck presents an ideal option for dual benefits helping both a business’s operations and tax outlook.
Creative Ways to Capture Additional Tax Advantages
While the Section 179 deduction delivers the largest immediate tax savings, businesses can leverage complementary tax strategies to maximize benefits:
Bonus Depreciation – Claim an additional first year deduction on the Cybertruck’s remaining tax basis after the Section 179 to get the fullest deduction fastest.
Depreciation Recapture Planning – Carefully structure the vehicle’s use timeline on paper to qualify for 5-year depreciation schedules and avoid depreciation recaptures from selling too early.
CAEVIP and Other Incentives – Apply California electric vehicle incentives on top of federal tax savings for further multipliers on multiple Cybertrucks.
Track Percentage Business Use – Meticulously record mileage logs and usage data to get the full tax deductions even with mixed business/personal use.
The Cybertruck as Ultimate Mobile Office
With remote work growing normal, entrepreneurs see vehicles morphing into multipurpose offices on wheels during commutes or mobile meetings with clients.
Blending connected workspaces with autonomy technology and ultra-durable construction, the Cybertruck for many epitomizes the next-generation electric business vehicle.
As Katie, founder of a 10-contractor creative agency shares, “The Cybertruck just exudes utility and innovation, like a rolling manifestation of my company’s identity.”
Tesla Cybertruck at Buena Park pic.twitter.com/jAUKY4kJXY
— Whole Mars Catalog (@WholeMarsBlog) November 22, 2023
And tapping into the potential tax savings magnifies the appeal even more for Katie and other small business leaders eagerly awaiting their Cybertrucks. “Getting significant deductions makes stretching for the Tri Motor model an easier choice,” she says.
So for entrepreneurs like Katie, the Cybertruck represents the ultimate intersection of operational efficiency and strategic tax planning.
Maximizing the Deduction’s Benefits
With game-changing tax savings within reach through the Cybertruck, Tesla-loving business owners should act quickly if they take delivery in 2023. Consult tax professionals to leverage this lucrative combination of EV innovation meeting a long-standing tax code sweet spot.
FAQ: Section 179 Deduction for Tesla Cybertruck
Get Help Setting Up Your Business Entity
To maximize your tax savings opportunities with the Cybertruck, you need to formally establish your small business and LawInc can help you professionally and affordably set up a corporation or LLC. To get the process started, simply complete our secure online LLC order form.
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All information provided is for general guidance only and tax laws and incentives frequently change. Cybertruck specifications and associated tax deductions are subject to change and require professional confirmation. Please consult a qualified tax expert before attempting to claim any EV-related tax deductions or credits.