The IRS has now released its full list of electric vehicle models eligible for the new and updated $7,500 US federal tax credit.
Here’s the list of Tesla models eligible.
The new $7,500 federal tax credit for electric vehicles in the US is coming into effect on January 1, 2023, but there are still a lot of details we don’t know about.
The biggest unknowns regard the requirements of battery material provenance and component manufacturing. Recently, the US Treasury announced that it is delaying the guidances regarding those requirements until March and, therefore, they won’t apply until then.
In the meantime, the new tax credit is still coming next month, and now the IRS has released a list of vehicles eligible.
You can find a full list here, but we looked into the Tesla models eligible here because there is a surprise in the list:
|Model Year||Vehicle Description||Applicable MSRP Limit|
|2023||Tesla Model 3 Rear Wheel Drive||$55,000|
|2023||Tesla Model 3 Long Range||$55,000|
|2023||Tesla Model Y All-Wheel Drive – 7 seat variant (3-rows)||$80,000|
|2023||Tesla Model Y Long Range – 7 seat variant (3-rows)||$80,000|
|2023||Tesla Model Y Performance – 7 seat variant (3-rows)||$80,000|
|2023||Tesla Model Y All-Wheel Drive – 5 seat variant (2-rows)||$55,000|
|2023||Tesla Model Y Long Range – 5 seat variant (2-rows)||$55,000|
|2023||Tesla Model Y Performance – 5 seat variant (2-rows)||$55,000|
The Model S and Model X are not on the list, but that’s not a surprise due to their starting price at over $100,000.
The surprise is that not all Model Ys qualify as an SUV, which enables a higher MSRP limit of $80,000 instead of $55,000 for all vehicles that are not pickup trucks, vans, or SUVs.
It looks like the IRS only considers the Model Y an SUV when it’s in a seven-seat configuration, but the rules don’t appear to be consistent across brands. For example, the Ford Mustang Mach-E is also limited to a $55,000 MSRP, and it doesn’t have an optional third row.
Top comment by Cypress
Well that is weird. I wasn’t sure if Y would get classified as an SUV or not, but I certainly didn’t expect 1/2 and 1/2.
However, the VW ID.4 does get access to the $80,000 MSRP limit, but it is only for the AWD versions of the SUV. There’s no seven-seat option for the ID.4, either.
There appear to be some inconsistencies in the new IRS update. GM vehicles are also not in there, but that might be because they haven’t filed all the paperwork yet.
Either way, if it’s on the list for now, you should be able to claim it.
The entire situation should become clearer during the first quarter of 2023, but we expect some models to potentially see a reduction in the tax credit due to the battery sourcing requirements.
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