All Tesla Model Y variants are now eligible for the $7,500 EV tax credit with a new $80,000 price limit

One of Tesla‘s most popular electric vehicles offering Tesla Model Y, finally gains full eligibility to the new federal tax credits of up to $7,500 under the Inflation Reduction Act, based on the US Department of the Treasury’s latest amendment.

Why were some Tesla Model Y variants initially disqualified from the tax credits?

The US Treasury previously released the full list of EVs eligible for the new $7,500 tax credit on January 2023. It revealed which EVs qualify under two categories of passenger cars and SUVs.

The qualifying passenger cars’ MSRP price cap was up to $55,000, while the cap for SUVs was up to $80,000. However, the IRS only recognized the seven-seat Model Y as an SUV, disqualifying the best-selling five-seat variant.

Apparently, the IRS determined whether the car was an SUV by examining the vehicle’s weight (Gross Vehicle Weight Rating). The five-seat Model Y was only a few hundred pounds short of the over 6,000 lbs requirement.

Nonetheless, the IRS finally amended the criteria for eligibility on February 3, classifying all Model Y variations as SUVs with an $80,000 MSRP cap. That said, all the Tesla Model Y variants will now have full access to federal tax credits of up to $7,500.

Below are the qualifying Tesla EVs for the federal tax credits:

People who qualify for the tax credit in the US should now have access to the popular Tesla Model Y for a significantly lower price. It covers single filers earning less than $150,000 and dual filers earning less than $300,000 annually.

It is worth noting that these updated criteria are valid until March, when the IRS will release new regulations on the battery requirements, which should change eligibility.

The complete list of vehicles that qualify and their price caps may be accessed here.