The federal tax credit for new clean vehicles purchased in 2023 or after is the one that matters for EVs.
Tesla's most recognizable vehicles are the Model Y and the less-expensive Model 3. New versions of these vehicles qualify for a $7,500 federal tax credit until March 2023, at which point the credit amount could change and even be reduced.
The tax credit adds to discounts the company has already applied to its most popular vehicles. As of Jan. 12, the price of the Model Y dropped by $13,000 or nearly 20%, going from $65,990 to $52,990. With the federal tax credit, that price could drop to $45,490. The Model 3 is now $43,990; with the tax credit, it's $36,490.
That places it firmly in the affordable EV category.
|Tesla model||Previous price||New price||Difference|
|Model 3*||$46,990||$43,990||-$3K (-6.4%)|
|Model 3 Performance*||$62,990||$53,990||-$9K (-14.3%)|
|Model Y*||$65,990||$52,990||-$13K (-19.7%)|
|Model Y Performance||$69,990||$56,990||-$13K (-18.6%)|
|Model S||$104,990||$94,990||-$10K (-9.5%)|
|Model S Plaid||$135,990||$114,990||-$21K (-15.4%)|
|Model X||$120,990||$109,990||-$11K (-9.1%)|
|Model X Plaid||$138,990||$119,990||-$19K (-13.7%)|
*Qualifies for $7,500 federal tax credit | Calculations: ZDNET | Source: Tesla
The federal EV tax credit is only available to individuals reporting modified adjusted gross incomes (AGIs) of $150,000 or less, heads of households with AGIs of $225,000 or less, or $300,000 for married couples filing jointly. The credit only applies if you buy a new vehicle with an MSRP of $80,000 at most for vans, sports utility vehicles, and pickup trucks or $55,000 at most for other vehicles. In addition, the seller must report your name and taxpayer identification number to the IRS in order for you to attempt to claim the credit.
On your end, make sure to file Form 8936, Qualified Plug-in Electric Drive Motor Vehicle Credit (Including Qualified Two-Wheeled Plug-in Electric Vehicles) with your tax return, You have to provide your vehicle's VIN on the form.
You cannot simply go out to a dealership and expect the dealer to give you these savings up-front. However, according to the US Department of Energy, starting in 2024 you should be able to get your credit at the dealer.