The Inflation Reduction Act has made major changes to electric vehicle tax credits in the United States. Previously, Tesla vehicles did not qualify for the $7,500 federal tax credit due to hitting the 200,000 vehicle cap years ago. However, the new legislation removes this cap, opening up credits again for Tesla buyers.
There’s a catch though – the new law adds requirements related to battery component sourcing and critical mineral extraction. As of January 1, 2024, the updated rules disqualify Tesla Model 3 vehicles (RWD and Long Range) from receiving the credit.
But there’s a way around this for Model 3 buyers – leasing rather than purchasing. The new EV tax credit rules apply to purchased vehicles, but do not impact leased vehicles in the same way. By leasing instead of buying, you can still claim the $7,500 credit even on recently produced Model 3s.
Additionally, the credit now has income eligibility caps – $150,000 for single tax filers and $300,000 for joint filers. As long as your income falls under these thresholds, leasing a Model 3 this year still makes you eligible for the full tax incentive.
So if you’re hoping to get your hands on a brand new Model 3 Highland and want to maximize savings, leasing for the next several years while meeting the income requirements is the best way forward. You can take advantage of the credit until Tesla gets their battery supply chains fully updated to comply with the new battery component and critical mineral requirements. Call your local Tesla showroom for details.