It's Official: Only One Tesla Model Doesn't Qualify for the Full EV Tax Credit

Tesla EVs Charging 8 photos
Photo: Tesla / autoevolution edit
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Tesla started the last month of this year's third quarter in full force by giving prospective customers renewed reasons to buy one of its fancier units – it introduced new, hefty discounts! While the price cuts were bad news for existing owners who paid a lot more, they represented a great incentive for those still waiting to pull the trigger. What's even better is that Tesla has just one car left that doesn't qualify for the EV tax credit – the Model S.
The federal government allows qualifying electric vehicle buyers to offset up to $7,500 of their dues to Uncle Sam. It's a great perk and an incentive that helps Americans seriously consider a plug-in hybrid, a battery-electric, or a fuel-cell (hydrogen-powered) vehicle.

For the remaining months of 2023, the EV tax credit can be obtained only by filing your taxes in 2024 for this year or by amending the already filed forms. That's because the Internal Revenue Service (IRS) allows buyers to use the adjusted gross income (AGI) that makes them eligible for the federal perk. If you earned less than $150,000 as a single filer, $225,000 as a head of a household, or $300,000 as a married couple filing jointly last year, you can use that income to further subtract more from what you owe the government.

For example, if you earned $140,000 in 2022 as a single filer and bought an eligible EV in 2023, but this year your status changed (i.e., earned more or got married), you can use the AGI from 2022 to get the EV tax credit. All you have to do is amend your filing. You'll only get the "tax discount" if you owe the $7,500. Uncle Sam will not pay you back any excess.

From 2024 onwards, the EV tax credit can also apply at the point of sale. That will be much simpler for buyers since dealers and automakers will be able to deduct the amount when the customer pays for the EV.

Keep in mind, however, that your vehicle of choice must also meet some eligibility criteria.

Tesla Logo on a Wrapped Car
Photo: Priscilla Du Preez on Unsplash
Tesla moved fast after the new EV tax credit rules were published and made sure that the Model 3 and Model Y qualified. Since then, the brand followed through with dropping the prices of its EVs, as we anticipated. That's how another of its cars joined the list of units eligible for the EV tax credit.

The Model X has an MSRP of $79,990 when writing, and that puts it right below the $80,000 price limit. Besides that, the tow package is included, and all the color options are free. Tesla might want to get rid of all the Model X parts before introducing a refresh.

The only vehicle that doesn't qualify for the federal perk is the Model S (with both its Dual Motor and Plaid versions) because it's a sedan and costs over $55,000.

As things stand today, the IRS says the full $7,500 EV tax credit can be obtained for the following Tesla models:
  • Model 3 RWD – $40,240;
  • Model 3 Long Range – $47,240;
  • Model 3 Performance – $53,240;
  • Model Y – $47,740;
  • Model Y Long Range – $50,490;
  • Model Y Performance – $54,490;
  • Model X Long Range – $79,990.

Besides the Model S, the Model X Plaid is also ineligible for the EV tax credit because it costs $89,990. One could also argue that the Cybertruck doesn't qualify for this fiscal advantage, but the all-electric pickup truck isn't yet available to consumers. However, the first delivery event is scheduled to happen soon. We might learn more about its eligibility then.

Finally, keep in mind that the Model 3 was just updated. It hasn't reached the US yet. The battery and the motors weren't upgraded, so the cars may continue to remain eligible. The sole change might revolve around the Model 3 Performance, which could be available later than the refreshed RWD and Long Range versions.
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About the author: Florin Amariei
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Car shows on TV and his father's Fiat Tempra may have been Florin's early influences, but nowadays he favors different things, like the power of an F-150 Raptor. He'll never be able to ignore the shape of a Ferrari though, especially a yellow one.
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