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Tesla Model Y’s complete lineup now qualifies for EV tax credits through Inflation Reduction Act

Credit: Tesla

Tesla’s complete lineup of Model Y trim levels now qualifies for electric vehicle tax credits through the Inflation Reduction Act, as the Internal Revenue Service (IRS) has increased the applicable MSRP limit to $80,000 across each of the all-electric crossover’s configurations.

In December, the IRS released a list of vehicles that would qualify for the EV tax credit, effectively taking off $7,500 from the purchase price in the form of a tax break.

While the tax credit was revised and allowed automakers who had not been eligible for the tax credits due to previously-enforced sales caps of 200,000 units, it still had its flaws.

Vehicles like the five-seat configurations of the Model Y were 238 pounds too light to be considered SUVs and, thus, did not qualify for the tax break because it fell into the category of “All Other” vehicles. Qualifying SUVs had an $80,000 MSRP limit, while “All Other” vehicles had a $55,000 limit.

This sent Tesla fans and its CEO Elon Musk into a spell of confusion, as the tax credit, which was used to incentivize the purchase of sustainable powertrains, still included various gas-powered hybrid models.

According to a report from Bloomberg, the U.S. Treasury Department said it would broaden the definition of an SUV. This would cause the government to revise its MSRP limits on certain Model Y vehicles that previously did not qualify for the credit.

“The change will allow crossover vehicles that share similar features to be treated consistently,” a report from the publication said.

The IRS has already updated the qualifying vehicles list on its website, with Tesla having each of its Model Y configurations now qualifying for the credit, as they are now considered SUVs in the government’s eyes.

tesla tax credit qualifying vehicles

Credit: IRS

The tax credit changes come just a week after Tesla CEO Elon Musk met with several high-ranking officials in Washington D.C. last week to discuss EVs and “shared goals around electrification.”

One of the topics of the meeting was “the broader cause of electrification.” EV adoption has been a main point of emphasis for Tesla, and its influence on other car companies to also develop competitive electric vehicles has been a critical part of the country’s adoption of battery-powered cars.

The IRS invited consumers to comment on the tax credit program, and petitions were spread across the internet, garnering tens of thousands of signatures supporting a revision to the program.

Other new additions to the qualified vehicles list are the Ford Mustang Mach-E, Cadillac Lyriq, and Volkswagen ID.4, which will benefit from the program’s reclassification of SUVs and Crossovers.

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Tesla Model Y’s complete lineup now qualifies for EV tax credits through Inflation Reduction Act
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