Buying Tesla electric cars with Bitcoin may result in an additional 53% tax

According to the Wall Street Journal, Tesla announced yesterday that it will officially accept Bitcoin as a payment method, but using this new payment method may cause buyers of Tesla to pay 53% more tax than buyers of other brands of the same price using fiat currency.

Thanks to the Energy Improvement and Extension Act passed in 2008, in order to narrow the price gap between expensive electric vehicles and cheap gasoline vehicles, the IRS has implemented a tax credit policy for electric vehicle manufacturers: electric vehicle manufacturers can receive a $7,500 tax credit for the first 200,000 electric vehicles they sell. After sales exceed 200,000 vehicles, the tax credit will be reduced by 50% every six months until it is gradually eliminated.

This gave Tesla a big tax advantage at the beginning. Tesla's early customers received a $7,500 federal tax credit, and some states also offered state tax credits. But starting last year, Tesla no longer qualified for the federal tax credit because it had sold so many electric vehicles.

The Bitcoin payment method announced yesterday may increase Tesla’s car purchase tax again.

Today, if buyers choose to pay with Bitcoin, they may face more taxes because the IRS will treat Bitcoin payments as the buyer's sale of an asset that has recently appreciated in value.

Let’s say a buyer from California uses $33,690 in bitcoin purchased three months ago to buy an entry-level Model 3 Tesla sedan. Based on the average marginal tax rate for Model 3 buyers from auto research firm Hedges & Co., he would owe $4,056 in federal taxes and $1,572 in California short-term capital gains taxes.

Compared to a similarly priced Hyundai Ioniq electric car, buying a Tesla Model 3 with Bitcoin will cost 53% more in taxes than buying a Hyundai Ioniq electric car with fiat currency due to its federal tax credit eligibility.

It is reported that starting this year, cryptocurrency ownership must be reported in federal returns, otherwise it will be punished by perjury.