Clarity rebates/incentives for 2020

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thealimo110

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Hi everyone,

Hope you're doing well. I'm thinking of getting the Honda Clarity (versus the Honda Insight or Toyota Prius Prime).

1. Here's my understanding of what's available for 2020:
* Federal tax rebate - $7500
* CVRP - $1000 (+$2500 for low income)
* PG&E/Edison - $800/$1000
* State of CA employee - $500 (thanks 4sallypat)

2. Are you guys aware of any issues regarding the federal tax rebate or CVRP for 2020? I read that a bill in Congress was turned down 2 weeks ago which would've extended the # of cars per manufacturer from 200k to 600k that are eligible for the federal tax rebate. However, this shouldn't affect Honda, Toyota, etc. who haven't already hit 200k, right?

3. Any thoughts on Clarity vs Insight/Prius Prime would be appreciated.

Thanks!
 
Just one comment. It's not a federal tax rebate, it's a tax credit. You must owe $7,500 in order to use the full credit, and it is only good for the current tax year.
 
thealimo110 said:
.....
* Federal tax rebate - $7500
* CVRP - $1000 (+$2500 for low income)
* PG&E/Edison - $800/$1000
* State of CA employee - $500 (thanks 4sallypat)

2. Are you guys aware of any issues regarding the federal tax rebate or CVRP for 2020? I read that a bill in Congress was turned down 2 weeks ago which would've extended the # of cars per manufacturer from 200k to 600k that are eligible for the federal tax rebate. However, this shouldn't affect Honda, Toyota, etc. who haven't already hit 200k, right?

3. Any thoughts on Clarity vs Insight/Prius Prime would be appreciated.

Thanks!
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Welcome aboard !
Assuming you are asking about the PHEV flavor ?
As for the federal credit, shouldn't have to worry as Honda has not reached the 200,000 unit production numbers.

State CVRP is dependent on funding thru the year. When I applied in January, I got my $1500 in April. But then in summer, it had run out and people had to wait for more funding. Later during the year, $1000 was re-introduced. Can't say how much will be available later this year in 2020.

Utility rebates are great too but remember to ask about L2 EVSE installation reimbursements.

State of CA employee discount is a shame that most dealers have no clue about this HP-Qxx program - but mine did and had zero issues when I went to F&I. So be prepared to do battle....

Don't forget to also get your $22 purple CA CAV HOV solo carpool stickers - you will have envious people looking at your car because these coveted stickers will join the Volt/Bolt, Tesla, Leaf, 500e, Prime, BMW, Audi, Merc, Taycan and other EV status cars...
 
https://ww3.arb.ca.gov/msprog/lct/vehiclescrap.htm

Additional low income incentives if you scrap an older vehicle.

There are calculators that let you estimate the incentives, which are pretty generous. I tested the calculator, and a 4 person household with $103k income still qualified, so it can cover a bigger range than expected.
 
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Regarding Clarity vs Insight/Prius Prime, the Insight is merely a hybrid (with no plug-in charging) similar to the Accord Hybrid in architecture.
The Prius Prime has significantly shorter battery range on a charge and is weaker when running in EV mode than the Clarity PHEV. Also smaller in the passenger compartment and luggage compartment. As a hatchback though, its cargo capability is more versatile.
 
ab13 said:
https://ww3.arb.ca.gov/msprog/lct/vehiclescrap.htm

Additional low income incentives if you scrap an older vehicle.

There are calculators that let you estimate the incentives, which are pretty generous. I tested the calculator, and a 4 person household with $103k income still qualified, so it can cover a bigger range than expected.
Click to expand...

ab13: It looks like this is a pretty inclusive rebate. Great find.

jdonalds: Thanks for correcting the wording. I'm aware; I just mixed up the terms.

4sallypat: Thanks for the post and your PM.

css28: Thanks for the input. I feel like I've researched the 3 cars a fair amount and I test drove all of them yesterday, and I got the same impression as you. I guess the biggest thing I'm looking for are intangibles or other factors that you may not easily come across while researching the cars. It seems like a somewhat common complaint is the power drop in the Clarity when it drops below 12%, but putting it in Sport mode or HV mode supposedly remedies the situation? Any other random things I should be aware of?
 
As recent as 2 weeks ago (when I picked up our Clarity) Honda dealers had a "Recent Grad" discount of $500 (but you have to finance at least 8k, or lease, but you could finance and then pay it off the first month, thereby making $500). You have to have graduated within last 2 years. Not sure if combinable with CA employee, but worth a shot?

It applies to all degrees except Ph.D. I did Masters last year. Unofficial transcript from University's website was enough of a proof, but you could also bring in the diploma.

I ended up financing the minimum I needed to get the deal and paid it off as soon as the first bill came. But I calculated the interest, and Id basically break even if i never paid it off, but just did the monthly payments (would be ~$500 in interest over 3 year loan).
 
Keep in mind that the federal tax credit for the Clarity is a full $7500 while for the Prius Prime is $4502 due to the larger battery capacity. This means that if cost is a deciding factor in your decision, you can buy a Clarity at a cost of $3000 more than what you spend on a Prius Prime and still break even.

This was a deciding factor in my decision. More space, longer EV range, and support for Android Auto, all at the same out of pocket cost? That's a no-brainer for me.
 
So, I just did the math and it seems that for a person in my situation (~$83k income for 2020, married filing jointly, 1 toddler, and 1 baby on the way), I will have a very low federal tax burden. Is there anything I can do to actually take advantage of the $7500 tax credit?

For example, if my dad cosigns the loan, could he claim the federal tax credit? And then I claim the CVRP (I qualify for the low income $3500 rebate) + the Clean Cars for All rebate (I qualify for the base $5500 rebate)? We live at separate residences, if that affects anything.
 
thealimo110 said:
So, I just did the math and it seems that for a person in my situation (~$83k income for 2020, married filing jointly, 1 toddler, and 1 baby on the way), I will have a very low federal tax burden. Is there anything I can do to actually take advantage of the $7500 tax credit?

For example, if my dad cosigns the loan, could he claim the federal tax credit? And then I claim the CVRP (I qualify for the low income $3500 rebate) + the Clean Cars for All rebate (I qualify for the base $5500 rebate)? We live at separate residences, if that affects anything.
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One strategy that some have employed is converting a traditional IRA to a Roth IRA. That creates a tax burden that can be offset by the EV Tax Credit. Distributions from a Roth IRA are tax free (after 59 1/2), and there are no minimum required distributions. Both of these factors are beneficial.
A cosigner would not be eligible for the Federal Tax Credit. If he wanted to purchase the car and lease it to you, he could claim the Tax Credit and you would be eligible for the rebates that are available when leasing a car (State rebates qualify, not sure on the others). This would be a bit tricky and likely need legal and/or tax professionals to set up, so the savings could be minimal.
 
DucRider said:
One strategy that some have employed is converting a traditional IRA to a Roth IRA. That creates a tax burden that can be offset by the EV Tax Credit. Distributions from a Roth IRA are tax free (after 59 1/2), and there are no minimum required distributions. Both of these factors are beneficial.
A cosigner would not be eligible for the Federal Tax Credit. If he wanted to purchase the car and lease it to you, he could claim the Tax Credit and you would be eligible for the rebates that are available when leasing a car (State rebates qualify, not sure on the others). This would be a bit tricky and likely need legal and/or tax professionals to set up, so the savings could be minimal.
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Interesting. So, what if we did a joint purchase so both of our names are on the title, etc.? Would he be able to claim the federal credit and I the California rebates?
 
thealimo110 said:
Interesting. So, what if we did a joint purchase so both of our names are on the title, etc.? Would he be able to claim the federal credit and I the California rebates?
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I think most folks would recommend against joint ownership of a vehicle. That can create liability and insurance issues.
 
thealimo110 said:
Interesting. So, what if we did a joint purchase so both of our names are on the title, etc.? Would he be able to claim the federal credit and I the California rebates?
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Getting into a lot of gray areas that should be addressed to competent tax attorney, but my inclination would be that the Federal Tax Credit would be apportioned to both owners in relationship to their percentage of ownership.
Not sure how CA would look at it, but would likely consider income from both parties to determine eligibility if both were on the purchase docs, and may require that you form a business that would claim the rebate (the applicant must be "an individual" or business). Something to ask them before proceeding.

Simple answer may be to lease the vehicle (the $7,500 tax credit should be applied as a cap reduction cost) and then purchase the vehicle at lease end (or possibly sooner).
 
Do you have any capital gains that could come from selling something that increased in value, typically stocks or other property?
 
If you have enough in your 401k retirement fund, then your tax/financial planner can tell you how much to transfer to a Roth IRA to give you a tax liability totaling $7,500 along with your usual tax liability. This way you can claim the entire tax credit and benefit from the fact that all later withdrawals from the Roth will be tax free. And the icing on the cake is that all growth or gains in the Roth over the years are tax free also. It’s not $7,500 cash in your pocket immediately, but it is far, far better for you financially in the long run. That would be my first choice (which is what I did) and my second choice would be to generate some capital gains if possible, as mentioned above, but only if you needed to as part of sound strategic financial planning.
 
ab13 & KentuckyKen: Thanks for the suggestions. My only involvement with investments, really, is my first contribution to a Roth IRA last year. So, unfortunately, these won't work. Hopefully, it can help someone else.
 
thealimo110 said:
ab13 & KentuckyKen: Thanks for the suggestions. My only involvement with investments, really, is my first contribution to a Roth IRA last year. So, unfortunately, these won't work. Hopefully, it can help someone else.
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Then lease or buy used will be the better options. The bank will take the credit and reduce the lease cost.
 
ryd994 said:
Then lease or buy used will be the better options. The bank will take the credit and reduce the lease cost.
Click to expand...
I contacted a Honda dealership as well as a Toyota dealership (for the Prius prime), but both said since the manufacturer (and not the dealer) receives the $7500, it won't be factored into the lease. Do Honda and Toyota do this? Or are these dealers just unaware?
 
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