Tesla has updated its U.S. Model 3 order page, indicating changes in the federal electric vehicle (EV) tax credit.
Starting January 1, 2024, the EV tax credit for both the Rear-Wheel Drive (RWD) and Long Range versions of the Model 3 is expected to decrease from $7,500 to $3,750. Previously, this reduction was only anticipated for the RWD model. Tesla is encouraging customers to take delivery in the fourth quarter of 2023 to ensure they receive the full incentive, according to its website (via @SawyerMerritt).
The Inflation Reduction Act of 2022, which came into effect on January 1, 2023, initially qualified certain electric vehicles, including various Tesla models, for a tax credit of up to $7,500. However, there are likely to be reductions to this federal tax credit after December 31, 2023.
To qualify for the tax credit, customers must purchase the vehicle for personal use and not for resale, primarily use the vehicle in the U.S., and meet Adjusted Gross Income (AGI) limitations. Additionally, the vehicle’s Manufacturer’s Suggested Retail Price (MSRP) at the time of delivery must not exceed set price caps, which include optional equipment physically attached to the vehicle but exclude software features, accessories, taxes, and fees.
The current AGI limitations are $300,000 for married couples filing jointly, $225,000 for heads of households, and $150,000 for all other filers. The price caps for federal tax credits are set at $55,000 for the Model 3, and $80,000 each for the Model X and Model Y.
Tesla’s Model 3 Rear-Wheel Drive, Long Range, and Performance, as well as the Model X Dual Motor, and all Model Y variants, are currently eligible for the full $7,500 federal tax credit for buyers who meet all federal requirements, including AGI limitations.
Tesla advises customers to check the IRS website for the most up-to-date information regarding federal tax incentives, as amounts and requirements may continue to change.
