The Short Answer
You can save up to $7,500 on a new Tesla with the federal tax credit, but only if you purchase before September 30, 2025. Your income must be under $150,000 (single) or $300,000 (married), and the vehicle must meet price caps: $55,000 for Model 3, $80,000 for Model Y.
Federal Tax Credit Breakdown
The federal EV tax credit offers up to $7,500 for qualifying new Tesla purchases. This credit expires on September 30, 2025, under current legislation.
Model 3 Eligibility
Model Y Eligibility
Income Requirements
Your modified Adjusted Gross Income (AGI) must fall below these thresholds. You can use AGI from either the purchase year or the previous year, whichever is lower.
Single Filer
$150,000
Maximum AGI
Head of Household
$225,000
Maximum AGI
Married Filing Jointly
$300,000
Maximum AGI
Real Example: Sarah's Model 3 Purchase
Sarah bought a Model 3 Long Range in August 2025 for $47,990. As a single filer with $135,000 AGI, she qualified for the full $7,500 credit.
She chose to transfer the credit to the dealer at purchase, receiving an immediate $7,500 discount instead of waiting until tax season.
How to Claim the Credit
You have two options for claiming the federal tax credit. Choose the method that works best for your financial situation.
Point of Sale Transfer
Transfer the credit to the dealer for an immediate discount at purchase. No waiting until tax season.
Tax Return Claim
Claim the credit when filing your tax return using IRS Form 8936. Receive the credit as a tax reduction.
State and Local Incentives
Many states offer additional incentives on top of the federal credit. These vary widely and can change frequently.
California
Clean Vehicle Rebate Project offers up to $2,000 for income-qualified buyers. Additional utility rebates available from PG&E, SCE, and SDG&E.
New York
Drive Clean Rebate provides up to $2,000 for new EV purchases. Con Edison offers additional charging equipment rebates up to $4,000.
Colorado
State tax credit up to $5,000 for new EVs. Additional local utility rebates available from Xcel Energy and others.
Other Benefits
Many states offer HOV lane access, reduced registration fees, free public charging, or parking benefits. Check your state's energy department website.
7 Ways to Maximize Your Savings
Purchase Before September 30, 2025
The federal credit expires after this date. Order early to ensure delivery before the deadline.
Use Lower AGI Year
You can use AGI from either the purchase year or previous year. If you had lower income last year, use that figure.
Stack State Incentives
Combine federal credit with state rebates and utility incentives. Some buyers save over $10,000 total.
Choose Eligible Configurations
Performance trims often exceed price caps. Standard and Long Range trims typically qualify.
Transfer at Purchase
Point-of-sale transfer reduces your loan amount, saving on interest over the life of the loan.
Check Utility Programs
Many utilities offer rebates for home charger installation ($500-$1,000) and special EV electricity rates.
Consider Used EV Credit
Used EVs qualify for up to $4,000 credit with lower income limits and price caps. Good option if new credits don't apply.
Common Mistakes to Avoid
Missing the Deadline
Ordering too late and missing the September 30, 2025 delivery deadline. Order at least 2-3 months early.
Exceeding Price Caps
Adding options that push the MSRP over $55,000 (Model 3) or $80,000 (Model Y). Check final price before ordering.
Not Checking Income Eligibility
Assuming you qualify without checking AGI limits. Verify your modified AGI before purchasing.
Ignoring State Programs
Missing out on thousands in additional state rebates and utility incentives. Research all available programs.
Leasing Instead of Buying
Leases don't allow you to claim the credit directly. The leasing company gets it, though they may pass savings to you.
Frequently Asked Questions
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