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Home ยป Tesla Model 3 RWD & Long Range to Lose All $7,500 Tax Credit Starting 2024

Tesla Model 3 RWD & Long Range to Lose All $7,500 Tax Credit Starting 2024


Tesla received updated guidance from the IRS spelling bad news for U.S. buyers of certain Model 3 versions. As of January 1st, 2024, Model 3 RWD and Long Range trims will lose eligibility for the full $7,500 federal EV tax credit.

Previously, Tesla expected these models to qualify for a reduced $3,750 credit under the newly passed Inflation Reduction Act. But the latest IRS rules clarify that RWD and Long Range Model 3s will actually receive zero federal tax credit for deliveries in 2024 or beyond. Only the range-topping Model 3 Performance still qualifies starting next year.

For buyers in the market, this closing window ramps up pressure to take delivery by December 31st, 2023 to secure the full $7,500 credit. Tesla updated online Model 3 configuration page in the US with new language.

The loss of subsidies delivers a major blow to the Model 3’s value proposition unless Tesla opts to cut prices, may dampen demand among more budget-conscious EV shoppers who counted on the tax credit to offset the initial purchase cost.

Tesla CEO Elon Musk previously lashed out against the EV tax credit changes, calling the rules “messed up” and disadvantageous to Tesla versus its competitors. But despite his complaints, Tesla has now fallen victim to provisions targeting North American built EVs with final assembly in the U.S.

For now, buyers eying the Model 3 should double check their configuration still qualifies for remaining 2023 federal tax credits. And those sitting on the fence may want to take the plunge before New Year’s to avoid a nasty $7,500 price hike starting next tax season.

With confusion swirling and time running out, shoppers need the latest accurate guidance on purchase incentives. At least for the 2023 tax year, Tesla’s Model 3 RWD and Long Range can still net bonus savings if you act decisively ahead of the looming January 1st deadline.