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4xe - $12,500 proposed tax credit stopped my purchase

GATORB8

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But I do believe it is all about balance. And giving a tax credit to people buying middle-high end cars is moronic and I am sick of paying taxes that go to people who don't need it. And the money goes to fucking musk who clearly doesn't need an extra dime.
Our tax structure is so skewed to taxing the "rich", it's not funny. The people taking the tax credit are probably looking at going from paying more in taxes than 95% of people to paying more than 93% of people.
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WXman

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People buying Teslas and JLs shouldn't need a damn tax credit. I am sick of paying for other people's toy cars. That POS 4xe doesn't even get better mileage than my gas engine Camry. I took it on a road trip (the Camry) recently and got an avg of 46mpg. That's a gasoline car that goes 0-60mph in about 7 seconds, not a super fast car, but very very efficient.

I don't get any tax credit for the Camry. This thing is dumb af.
I can't tell if this guy is joking or being serious.

Either way his points are actually valid. :D The 4xe saves ZERO money, as it costs the same per mile driven as a diesel or very efficient gas powertrain in the same Jeep. It also does nothing for the environment except help to ruin it, as it's still using gasoline, oil, and other fluids but it adds a battery pack that was harmful to mine materials for and caused excessive pollution during manufacturing.

The 4xe is one of the best gimmicks they've come up with yet, second only to eTorque.
 

Whaler27

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You guys need to stop looking for a rational or predictable path in US tax policy. There isn’t one.

With few exceptions, most of whom are complete whackadoodles, politicians are human windsocks. Their positions swing instantly and wildly from moment to moment based on polling and their assessment of potential personal benefit. Most don’t give a crap about the environment, or employment, or debt, or equity, or whatever the community focus of the day is. The best plan is to make the best deal possible given the rules that are in place at the time you’re ready to buy. The available options and costs are always subject to political idiocy, and they can always get worse.
 

mferrara91

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Yes, and Yes Significantly.

In a lease, you only pay the difference between Cap Cost and Residual Value (plus interest/fees/taxes). The residual is a set percentage of MSRP, so reducing cap cost is a direct savings to the lease costs, so you'll realize the entire 7500 savings plus interest during the lease term.

Just the $7500 alone is a reduction of monthly lease payment of $208/month on a 36 month lease before even factoring the interest savings.

All the 4xe lease deals are good, but a lower MSRP Sahara gets to be awesome. Talking $400 ish payments for mid $50k MSRP.
That is the only way I would get a 4xe, through lease. If you purchase, the $7500 is only a reduction off your tax liability. So, say you file your taxes and you are due to receive a refund, you do not get the $7500 on top of the refund. If you owe taxes, that is where the $7500 comes into play. Not worth it in my opinion
 

ajkitebrder40

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That is the only way I would get a 4xe, through lease. If you purchase, the $7500 is only a reduction off your tax liability. So, say you file your taxes and you are due to receive a refund, you do not get the $7500 on top of the refund. If you owe taxes, that is where the $7500 comes into play. Not worth it in my opinion
Agreed, and a lease on a Jeep is worthless to me because I know I'm going to use it like a Jeep, and it will be non-returnable more than likely on a lease. I've never done a lease, but the calculation of paying the lease and then buying it outright doesn't compute even with the $7500 deduction upfront.
 

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That is the only way I would get a 4xe, through lease. If you purchase, the $7500 is only a reduction off your tax liability. So, say you file your taxes and you are due to receive a refund, you do not get the $7500 on top of the refund. If you owe taxes, that is where the $7500 comes into play. Not worth it in my opinion
I have had a hard time understanding how exactly the rebate works. It sounds so simple but then I think about it.

Let’s say I earn $120,000 a year and have a $30,000 tax liability. Now let’s say I pay taxes all year, but not enough to satisfy my liability- and at the end of the year I owe the IRS $7500. If I bought a 4xE during the year, I would now owe the IRS $0.00. Right?

What if I paid exactly what I owed in taxes and normally would break even. Would my tax liability then be reduced to $22,500 and the IRS send me $7500 because during the year I paid $30,000?

Now let’s say I made $32,000 last year and had a $0 liability. That’s when the tax credit is useless right?
 

GATORB8

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That is the only way I would get a 4xe, through lease. If you purchase, the $7500 is only a reduction off your tax liability. So, say you file your taxes and you are due to receive a refund, you do not get the $7500 on top of the refund. If you owe taxes, that is where the $7500 comes into play. Not worth it in my opinion
It’s not what you owe at the end, it’s your total tax liability (including payroll witholding). If you can afford a $65k vehicle, I need to talk to your accountant if you don’t pay 7500 in taxes.
 

GATORB8

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I have had a hard time understanding how exactly the rebate works. It sounds so simple but then I think about it.

Let’s say I earn $120,000 a year and have a $30,000 tax liability. Now let’s say I pay taxes all year, but not enough to satisfy my liability- and at the end of the year I owe the IRS $7500. If I bought a 4xE during the year, I would now owe the IRS $0.00. Right?

What if I paid exactly what I owed in taxes and normally would break even. Would my tax liability then be reduced to $22,500 and the IRS send me $7500 because during the year I paid $30,000?

Now let’s say I made $32,000 last year and had a $0 liability. That’s when the tax credit is useless right?
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GATORB8

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Agreed, and a lease on a Jeep is worthless to me because I know I'm going to use it like a Jeep, and it will be non-returnable more than likely on a lease. I've never done a lease, but the calculation of paying the lease and then buying it outright doesn't compute even with the $7500 deduction upfront.
More of a cash flow benefit. Your cash outlay over 36 months would be less than outright cash purchase, or even 72 month financing. You would only "return" a lease if it's worth less than Residual Value at the end. You can trade/sell it at that time for the Residual Value and pocket any earned equity (if the resale value is more than the residual value).

On vehicles that have manufacturer supported lease rates, and that depreciate faster than the RV, you can prevent the net depreciation exposure.

For example from our personal experience. Leasing a new MB 300 will likely cost less than buying a used low mileage example and selling it after the same term.
 

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roaniecowpony

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This JD Power site explains the federal tax credit as being a straight out reduction of tax liability. Take the amount right off the bottom line tax you owe. There is also a bit about California's tax credits. https://www.jdpower.com/cars/shopping-guides/how-does-the-federal-tax-credit-for-electric-cars-work

Personally, I'm not motivated to join in supporting this giant publically funded EV development program. My reluctance has more to do with what capabilities I want in a vehicle than pollution, tax credits and all the other things. We are retired and don't daily commute. I want long range road trip to remote western states capability in my trucks and off-road vehicle. That just isn't practical at this time. So, gas or diesel is the most practical choice for me.

Now, if my wife wanted a new car, I might be motivated to evaluate the possibility, since her car is used only within the greater Southern Calif (LA-OC) area. But my wife is a 10 year+ ish vehicle owner. I believe a EV/PHEV/FCEV will not be maintainable beyond 10 years, considering current laws and aftermarket industries, unless manufacturers step up on their own.

Personally, I'm rooting for fuel cell EVs. Time will tell what technology ends up the most popular.
 
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jlang

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That is the only way I would get a 4xe, through lease. If you purchase, the $7500 is only a reduction off your tax liability. So, say you file your taxes and you are due to receive a refund, you do not get the $7500 on top of the refund. If you owe taxes, that is where the $7500 comes into play. Not worth it in my opinion
Do people still get tax returns?

Also, does anyone know if a EV credit can be used towards owed back taxes? For example 2018? My co-worker was audited and owes 18k in back taxes. He is ordering a 2022 once they open up but will get a 4XE if EV credits can be applied to monies owed.
 

roaniecowpony

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Do people still get tax returns?
Yeah, BOHICA. That's a "return".

With the proposed law to allow the IRS to have direct access to monitor your financial institution account transactions, and pushing the statutes for tax audits/liability out to 20 years, $7500 EV credit seems like a trivial consolation.
 

N8213

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Are there any others out there that stopped their plans to buy a 4xe because of the proposed increase in the electric vehicle credit? The proposed legislation is currently written to increase the credit from $7.5k to $12.5k for purchases after 1-1-22. I can’t get past the potential of an instant $5,000 loss in value.
Not to delve into politics, but counting on politicians for anything beyond them working for reelection does not seem like a sound strategy.
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