Tesla getting $412 million in tax breaks on new $3.6 billion Nevada investment

Tesla getting $412 million in tax breaks on new $3.6 billion Nevada investment

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LAS VEGAS (KLAS) — Tax breaks worth $412 million could be approved for Tesla in the coming days after the company’s recent announcement of an additional $3.6 billion investment.

While final approval is expected at a Thursday meeting of the Governor’s Office of Economic Development (GOED), Democrats in the Nevada Legislature have asked for more time to review the tax breaks.

The laws used to give the new tax breaks to Tesla were set up when the company received its initial deal to build its “Gigafactory” in 2014. Those tax breaks added up to $1.3 billion.

The state is preparing to decide on tax “abatements” — reductions or discounts of tax liabilities (not payments) — that fall under three categories:

  • $66.6 million sales tax reduction for 20 years
  • $17.6 million Modified Business Tax (Tesla doesn’t pay for 10 years)
  • $246 million personal and real property tax (Tesla doesn’t pay for 10 years)

In addition, Tesla will be reimbursed $81.4 million in sales tax over 20 years through an “economic diversification district” established in 2014.

A rendering shows the new investment will expand the existing Gigafactory building at the Tahoe-Reno Industrial Complex.

(Nevada Governor’s Office of Economic Development)

The tax breaks are given under conditions that Tesla and the state agreed on previously, but had not been disclosed to the public. The documents detailing the tax breaks were included in materials leading up to Thursday’s meeting.

Among the conditions:

  • Investment of $3.5 billion or more (Tesla’s project is $3.6 billion)
  • Half of all employees used in construction must be Nevada residents
  • Half of all employees “engaged” at the project must be Nevada residents

The $3.6 billion project is an enormous investment in producing Tesla’s Semi trucks, described as a “fully electric combination truck, with 500 miles of range and energy consumption of less than 2 KWh per mile.”

The new factory being built near Tesla’s Gigafactory about 30 miles east of Reno will bring 3,000 new jobs to the area. The company announced the project in a Jan. 24 news conference with Gov. Joe Lombardo and Tesla founder Elon Musk in attendance.

GOED notes in its materials that any agreements between Tesla and Storey County are separate and not under the agency’s purview.

The $412 million in tax savings is the third-highest amount provided by the state, behind only the $1.3 billion initial savings on Tesla’s Gigafactory and $750 million in public financing for Allegiant Stadium.

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