After all the tax credits and discounts and incentives and gift cards are applied, and your new Brammo Enertia is parked in your garage, what’s left in your wallet? It depends, of course, on where you live. And where you bought it. And who you bought it from.
Disclaimer: Don’t get your tax or other financial advice from anyone whose online name ends in -fan. This means: do your own homework on this purchase. I’m just trying to get you to think.
United States of America
Let’s assume for the sake of simplicity and Ameri-centrism, that you are a citizen of the U.S. You have just bought a Brammo Enertia powercycle, and it cost $7,995. (Note: by waiting until the middle of November, you already saved $4,000.)
Thanks to the Federal Government, you are eligible for a tax credit on 10 percent of your purchase price. This isn’t a rebate, so you don’t get the “benefit” of the money until you file your income tax return for the year. Since we’re looking at ultimate out-of-pocket, let’s go ahead and credit that amount: 10% of $7995 is $800 (we’re rounding up) which brings the out-of-pocket to: $7195.
Let’s also lump the state sales taxes and any excise taxes you might have had to pay here. At least for Enertias purchased before December 31, 2009, you will get to take a deduction for those taxes. Here, it gets a bit sloppy as it’s a deduction, not a credit, so it doesn’t directly subtract from your tax liability… rather, it acts as a decrease in the amount of your gross income. I can see your eyes glazing over, so let’s just pretend that we’re not going to have to worry about sales taxes, okay?
State Tax Incentives
I’m not going to give 50 examples of how you may be able to decrease your out-of-pocket cost depending upon your state, but I do want to mention one noteworthy example. (Really good 50 state starting point is here.)
Colorado has an amazing tax credit that may save you big bucks. Recently, there was a news report that if you bought a Tesla in Colorado, you could get a $42,000 state tax credit. Lots of “ifs” here: Had to purchase by December 31, 2009, had to be a resident of the state, had to purchase from a manufacturer or vendor in the state, etc. So… how might it apply to the purchase of a Brammo? Bear with me, as it’s a bit circuitous, and that big disclaimer definitely applies here: I am not a tax expert, a tax attorney, or anyone you should give any more credibility to than the Sham Wow guy.
IF you bought your Brammo from Best Buy in Colorado . . . Alright, here’s our first hurdle. None of the Best Buys in Colorado actually sell the Brammo. But lets say, for the sake of our BrammoFantasy here, that you could order the bike from the order desk of your local Colorado Best Buy, and have it shipped to that store. (Surely they must be working on something like this). You give them the check for $7995, they give you the bike.
Another “if”: If a two-wheeled vehicle is eligible for the tax credit. I’ve looked at the law and it’s much more confusing than it needs to be. In one part it says that a “light duty vehicle” does not include a two wheeler. However, the operative language of the tax credit just says the credit applies to a “motor vehicle” and that term refers to a vehicle that is required to be licensed and registered to operate on the highways of the state. Thus, it does not appear to limit the credit to two wheelers. One astute person suggested “take the credit” and let them try to prove that two-wheelers aren’t included. Ah yes, the ol’ “it’s better to ask for forgiveness than to ask for permission” school of thought. (It’s good that I can just theorize, rather than actually have to pull something like this off in practice.)
Okay… stay alert… we’re almost to the good part.
According to the Colorado law, for an electric (zero emission) vehicle, you can take a tax credit of 85% of the cost of the vehicle, up to a $6000 ceiling, but “the total amount of any Federal tax credits or other incentives combined with the state tax credit cannot exceed [...] the difference between the actual cost and the cost of a similar traditional fueled vehicle.“
Breaking it down . . . The total amount of any Federal Tax Credits or other incentives = $800
the state tax credit ($6000=the ceiling, because 85% of $7995 is greater than $6000)
“Combined” $800 + $6000 = $6800
“the difference between the actual cost ($7995) and the cost of a similar traditional fueled vehicle” ($?) Let’s take a $3500 assumption on a 250cc Ninja. $7995 – $3500 = $4495. So… wouldn’t the max Colorado credit be $4495? Bringing the cost of the bike to… 7995 – 800 – 4495 = $2700.
Holy crapballs. Pardon my French. Now we’re talking chicken feed, right? I mean, this guy’s white shirt probably cost more than that.
I know what you’re thinking. ” But Brammofan, surely it can’t get better than this?”
Just hold on to your butts. The ride’s not over.
Remember that check for $7995 that you handed over to Best Buy? You didn’t really pay by check, did you? Of course you didn’t. You used your Reward Zone card, didn’t you? So you basically earned $5 for every $250 you spent at Best Buy. So you ended up with an extra $160 you can spend at Best Buy, bringing that $2700 down to $2540.
So, Einstein… how much are you going to be saving at the gas pump this year because you’re not driving your Landcrusher back and forth to work?
Hey, Judy…how much money are you going to save because guys are buying all your drinks so they can sit next to the “Powercycle Chick” at the biker bar?
Just some questions to ponder this week as you get ready to do your Christmas shopping.