Tesla Model X will potentially be eligible for $25,000 in tax deduction

The long-awaited Tesla Model X, which will launch on September 29th, could become a very popular vehicle with American business owners, not just because of its signature ‘Falcon Wing’ doors or the ‘sculptural beauty‘ of its second row seats, but because it could actually be a great bargain despite of its $80,000 starting price.

Beyond the $7,500 federal tax credit offer at the purchase of electric vehicles and other tax incentives at the state level, the Model X’s weight and capacity could make it eligible to the $25,000 tax deduction for heavy vehicles under Section 179, also known as the ‘Hummer Tax Loophole’…

Section 179 of the tax code, which allows taxpayers to deduct the cost of certain assets instead of capitalizing and depreciating them, became famous for making Hummers very popular with businesses when it allowed for tax deductions of up to $500,000 for the purchase of heavy vehicles and equipment. Hence the ‘Hummer Tax Loophole’ nickname. The loophole has since been revised to only allow for up to $25,000 in tax deductions, though an active lobbying effort is currently in place to bring it back to $500,000.

Under the Section 179,  a SUV or Crossover, like the Model X, needs to have a gross vehicle weight rating (GVWR) of over 6,000 lbs to be eligible for the tax deduction. Tesla has yet to confirm the official GVWR of the Model X, but a little extrapolation from the specifications of the Model S, which is built on the same platform as the Model X, shows that Tesla’s new SUV could easily reach over 6,000 lbs.

The gross vehicle weight rating is the weight of the vehicle (curb weight) plus the weight of driver, passengers and cargo capacity, but excluding the weight of any trailer and towing capacity.

Independent of battery size, the GVWR of the Model S is 5,710 lbs. The curb weight of a Model S 70D is 4,608 lbs. Elon Musk said the Model X should be about 10% heavier than the Model S. Increasing the Model S 70D’s GVWR by 10% of its curb weight brings it to 6,170 lbs or well over the 6,000 mark, and that’s only for the smallest battery option and without taking into account any possible capacity increase for the Model X.

This should make the Model X the first electric vehicle with a gross vehicle weight rating over 6,000 lbs, thanks in part to its heavy battery pack, which could weight as much as 1,200 lbs.

Taking into account tax incentives for electric vehicles, potential savings on gas and now this possible generous tax deduction, I wouldn’t be surprised if business owners and fleet managers start bringing up the Tesla Model X to their accountants after the launch of the vehicle at the end of the month.