Tesla Now Lists Model 3/Y Prices After Federal Tax Credit

model 3 model y tax credit

Tesla has made notable changes to the pricing information presented on its website, now promoting the prices of its Model 3 and Model Y vehicles factoring in the potential savings from the Federal Tax Credit (via @Tslachan).

Clicking the “starting at” price link takes customers to existing inventory, which currently is showing extra discounts across the Model 3 and Model Y lineup. These cars are available for pick up right away depending on location.

Tesla’s Model 3 now begins at $32,740 USD while the Model Y starts at $39,990 USD, both figures reflecting a potential savings from a Federal Tax Credit of up to $7,500. This tax credit is available to customers who purchase a new, qualified Tesla vehicle and meet all federal requirements.

Currently, all trims of the Model 3 and Model Y qualify for the full $7,500 tax credit. That equates to six total Model 3 and Model Y vehicles for customers to choose from. These vehicles are also eligible for state EV incentives on top. In California, the Model 3 after the federal tax credit and state incentives is cheaper than a Toyota Camry.

The eligibility for the Federal Tax Credit is determined by the Adjusted Gross Income (AGI) of the buyer. The limitations set are $300,000 for married couples filing jointly, $225,000 for heads of households, and $150,000 for all other filers.

Furthermore, a price cap also applies to the Federal Tax Credit, with the vehicle price at the time of delivery not exceeding $55,000 for the Model 3 and $80,000 for the Model Y. This price includes any optional equipment physically attached to the vehicle upon delivery but does not account for software features, accessories, taxes, and fees.

The changes to Tesla’s pricing information on its webpage come as a result of the Inflation Reduction Act of 2022, which came into effect on January 1, 2023. This act qualified certain electric vehicles, including Tesla’s Model 3 and Model Y, for a tax credit of up to $7,500. The qualifications include that customers must purchase the vehicle for personal use, use the vehicle primarily in the U.S., and meet AGI limitations and price caps.

Tesla reminds customers that Federal tax incentive amounts and requirements may change over time. To stay updated with the most recent details, it encourages customers to check the IRS website.