The complete Tesla Model 3 and Y lineup now qualifies for a full $7,500 federal tax credit for clean cars. On Tuesday, the U.S. EPA officially added all Tesla Model 3 and Model Y variants to its list of tax-credit eligible vehicles.
Previously, only certain versions of the popular EVs qualified for the full subsidy, while others received partial credit. Now offered: the Model 3 Long Range AWD and Standard Range Rear-Wheel Drive for the $7,500 credit instead of the $3,750 partial rate. Tesla had marked the change for all six of the models on its website Friday ahead of the EPA update.
The full credit marks down the entry level RWD Model 3 from $40,240 (plus a $1,390 destination fee) down to $32,740. The car has a 272-mile range. That puts it in line with more budget-friendly gas-powered midsize cars, like the Honda Accord.
Electric competitors like the Hyundai Ioniq 6 and Polestar 2 don’t qualify for the federal credit because of battery material sourcing and vehicle manufacturing locations. In some states, like California, Tesla vehicles are eligible for additional tax credits, dropping the price further.
Under the new tax credit program part of the Inflation Reduction Act, sedans have to be priced under $55,000 and SUVs under $80,000, so Tesla’s larger and more expensive vehicles (the Model S and X) don’t qualify for credits. Tesla’s pricing fluctuates often, so check the grand total including add-ons, delivery fees and other charges don’t hit or pass the price cap.
Other restrictions, such as customer income caps at $150,000 for an individual, are part of the revamped federal program, limiting high-earners from eligibility for the rebate. In 2024, the list of eligible vehicles will likely change again as North America-based requirements for critical mineral sourcing and battery component manufacturing ratchet up. So, stay tuned.
