Exciting news for prospective Tesla buyers: the horizon for used electric vehicle (EV) enthusiasts has expanded with the recent inclusion of Tesla vehicles in the $4,000 tax credit bracket through the Inflation Reduction Act (IRA). This remarkable development applies not only to Tesla's sleek lineup of EVs but also encompasses Plug-In Hybrid Electric Vehicles (PHEVs) and Fuel Cell Electric Vehicles (FCEVs). However, as always, there's a crucial hurdle to navigate for a used Tesla to unlock this credit.
The shift in eligibility for Tesla vehicles came into focus with the latest update on FuelEconomy.gov's website. This notable change now reflects that all four of Tesla's currently-available models, along with the iconic Original Roadster, are now listed among the vehicles that qualify for the $4,000 tax credit. This transformative update was first spotted by the keen eyes at InsideEVs.
To gain access to this credit, certain criteria must be met by both the vehicle and its prospective owner:
Buyer Qualifications:
- The purchaser must be an individual who intends to utilize the vehicle personally, not for resale.
- The buyer cannot be the original owner of the vehicle.
- They must not qualify as a dependent on someone else's tax return.
- No claim for another used clean vehicle credit should have been made in the three years prior to the purchase date.
Income Requirements:
- Married couples filing jointly or surviving spouses need an income below $150,000.
- Heads of households must have an income not exceeding $112,500.
- For all other filers, the income threshold is set at $75,000.
Vehicle Eligibility:
- The vehicle must be manufactured by a qualified manufacturer, as per the IRS's index.
- Fuel cell vehicles have an exception and don't require a qualified manufacturer. Detailed guidance is provided in Rev. Proc. 2022-42.
- The sale price of the vehicle must not surpass $25,000.
- Its model year should be at least two years earlier than the current calendar year of purchase.
- The vehicle should not have been transferred to a qualified buyer after August 16, 2022.
- It should primarily be used within the United States.
- The gross vehicle weight rating should be less than 14,000 pounds.
- It should either be an eligible fuel cell vehicle or a plug-in electric vehicle with a battery capacity of at least 7-kilowatt hours.
While the prospect of obtaining a Tesla at the $25,000 threshold might seem challenging, especially through dealerships, recent data from iSeeCars sheds light on the Model 3's pricing dynamics. The year-over-year price change for this model has been the most significant, with a 30.5 percent increase from June 2022 to June 2023, translating to a considerable price difference of $16,258. Nevertheless, this price point still surpasses the $25,000 requirement for the coveted $4,000 tax credit.
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